Banks will be restored to health: Raghuram Rajan

He said RBI will strive to have 'clean and fully provisioned bank balance sheets by March 2017'

Reserve Bank of India Governor Raghuram Rajan said on Thursday efforts by the central bank and the government to clean up banks' balance sheets would be successful and warned analysts against "scare-mongering" about the level of stressed assets in the sector.

Rajan said the RBI would strive to have "clean and fully provisioned bank balance sheets by March 2017," while noting the government's planned capital infusion in state-run banks would be sufficient.

He also said RBI projections showed that only "a small minority" of state-owned banks would breach core capital requirements in the absence of any recapitalisation.
 

 

The speech comes as shares of state-owned lenders have tumbled badly after some of them posted a surge in bad loans.

"The market turmoil will pass. The clean-up will get done, and Indian banks will be restored to health," Rajan said in a speech in Mumbai.

"There are some wild claims being made by some financial analysts about the size of the stressed asset problem. This verges on scare-mongering."