Deadline for bank book clean up remains March 2017: Mundra

Banks were told to identify stressed assets and make prudential provisions for them, said Mundra

Sticking to deadline of March 2017 to cleaning up of bank books, Reserve Bank of India (RBI) on Thursday said banks must meet capital adequacy norms all through after taking haircuts.

RBI Deputy Governor S S Mundra on Thursday said that during the asset quality review in 2015-16, banks were told to identify stressed assets and make prudential provisions for them.

RBI had indicated about finishing clean up - recognisition and prudential provisioning - by March 2017 and there is no change in timeline, he told reporters after inaugurating branch of Bandhan Bank in South Mumbai.

Asked about failed debt recast under Strategic Debt Restructuring ( SDR), he said consequences will follow ( in terms of staus of asset and provisons).

In cases where SDR was used, banks could treat exposure as standard asset for 18 months and use that time to find a suitable strategic partner for the stressed account. After the end of 18 months, window loan would become non-performing asset.

There are different sets of tools for tackling variety of cases. RBI is in discussions with banks on changes to various restructuring schemes. He declined to comment if RBI annual policy for 2015-16 will address bankers' demands.

Referring to dip in collections of micro finance institutions, he said some pressures (deliquencies) after demonitisation was expected and that is why RBI gave forberance for asset quality treatement.

"The pressure is short term pain and not a matter of worry though Reserve Bank is keeping a close watch on the unfolding situation," he said.