Banks should recognise NPAs early:RBI

Indian banks should recognise non-performing assets (NPA) early and help the borrower while keeping the NPA under wraps will be injurious to all, said a senior RBI official.

Speaking to reporters here on Thursday, Deputy Governor S.S.Mundra said hiding the NPAs will be a big problem for the banks and its borrowers.

Noting that an account turning into an NPA is not a sin, he said that when an account turns sticky, then the banks should recognise it fast in its books and also try to help out the borrowers.

The reality would be known to both the parties once an account is classified as NPA, he said, adding the two parties can sit together and chalk out the future strategies.

According to Mundra, the Rs.7,940 crore funds allotted for recapitalisation of government owned banks is insufficient.

Mundra said some portion of the recapitalisation funds would to go towards beefing up the balance sheet and money would be needed when the economy hits the growth path.