NPAs not a systemic issue, says RBI

Deputy governor of the Reserve Bank of India (RBI) Anand Sinha on Tuesday said burgeoning non-performing assets (NPAs) in the banking system was not a systemic issue but only a reflection of the economic stress being faced.

“Whenever there is stress on the economy, both global and Indian, that is bound to reflect on the banking system. But I will not call it a systemic issue,” Sinha told reporters on the sidelines of a conference here.

His comments come a day after Finance Minister Pranab Mukherjee said NPAs had grown at “an uncomfortable and unacceptable rate” in the past two years and asked banks to tread cautiously because of the risks involved.

The NPAs of public sector banks grew by a percentage point to about 3.3 per cent of the assets in 2011-12, as against 2.3 per cent a year ago.

Several companies are opting for corporate debt restructuring to tide over the difficult financial situation in the backdrop of the slowdown. Aviation, state electricity boards, textile, telecom infrastructure and steel are among the sectors reporting stress.

RBI had held a meeting with the top brass of banks last month to take stock of the situation and suggest ways of dealing with the issue.

On depreciation of the rupee and on whether RBI was considering opening a special window for oil importers, Sinha refused to give a direct answer.

“All options are open. Whatever is there on the table, how can we close down an option? But I cannot comment on what has been done or what will be done,” he said.

When asked about the timeline for issuing new bank licences, Sinha said the central bank was waiting for the necessary amendments to the banking regulations being passed by the government.