PSBs need to cut bad loans, will need more capital: Urjit Patel

RBI governor said 9.6% NPA in system worrisome, govt should empower banks to take a hit

Reserve Bank of India (RBI) Governor Urjit Patel on Saturday said banks would need to take a haircut for resolution of current stressed assets, and this would require higher capitalisation.

“The success and credibility of all resolution efforts would be critically contingent on the strength of public sector banks’ balance sheets to absorb costs,” he said, addressing the National Conference on Insolvency and Bankruptcy in Mumbai. 

He added, “It is clear public sector banks will need to take haircuts on current exposures under any resolution plan agreed within or outside the Insolvency and Bankruptcy Code (IBC). This would require higher