Jan Dhan visionary but challenges in execution: Kotak

A day after RBI Governor Raghuram Rajan cautioned banks against hunting for number of accounts, Kotak Mahindra Bank Vice Chairman and Managing Director Uday Kotak said 'Jan Dhan' scheme may be visionary but there is a challenge in execution.
"Of course the issue is that there is a big difference between vision and details...Therefore, the difference between big picture and outcomes is execution and Jan Dhan may be visionary but challenge is in execution and what happens is vision is laid down and targets are put to banker," he said at an event here.
"It is back to same point their (bankers) focus on opening number of accounts not on the purpose of that which is to make a difference. So, we may get the targeted number but we may not get the real outcome," he said.

On the asset quality, he said the Indian banking system is probably going through the most challenging time on the whole non-performing asset side.
"The recorded gross NPA plus restructured assets is 10 per cent. I believe there is at least 4-5 per cent which is embedded which is still not out in the open," he said.
According to estimates, recast loans at about Rs 3.5 trillion (Rs 3.5 lakh crore) constitute nearly 6 per cent of the total banking system.

The gross NPA of the banking sector rose to Rs 2.40 lakh crore at the end of March 2014 from Rs 1.75 lakh crore at the end of previous fiscal.

"If 15 per cent of the loan book is under pressure it is going to create a challenges and then we have all the investigating agencies and 70 per cent of the Indian banking industry which is in the hands of state which obviously will create pressures," he said.
"We need to ensure that pressures on the financial system do not lead to slowdown in economy. That is a serious risk and challenge that we need to address," he added.
As banks rush to open accounts under the Centre's Jan Dhan scheme, RBI Governor Raghuram Rajan yesterday cautioned them on the risks involved in just hunting for numbers, asking them not to compromise on core objectives of the programme.

"When we roll out the scheme, we have to make sure it does not go off the track. The target is universality, not just speed and numbers," Rajan had said.
The scheme can be a "waste" if it leads to duplication of accounts, if no transaction happens on the new accounts and if the new users get bad experiences, he had added.