The issue of non-performing assets (NPA) should not be viewed in isolation for one public sector bank at a time when growth is hard to come by.
A sharp rise in NPA of banks is due to internal and external factors. Big banks such as the IDBI Bank, by virtue of a relatively large asset base and institutional orientation towards development finance, have more exposure and hence more NPA.
Banks took a plunge when the financial climate was perceived to be favourable and credit proposals received were found to be commercially viable. Risk perceptions are based on key available indicators, which keep changing with time. Predictions turn out wrong almost always. The uncertainty level is so high that it is difficult to figure out what the situation would be like a few days later.
With credit growth of banks becoming near stagnant, even with a cut in the lending rate, there are no signs of revival.
Banks should be allowed to carry out their normal functions such as lending instead of being bogged down by the NPA burden.
Srinivasan Umashankar Nagpur
A sharp rise in NPA of banks is due to internal and external factors. Big banks such as the IDBI Bank, by virtue of a relatively large asset base and institutional orientation towards development finance, have more exposure and hence more NPA.
Banks took a plunge when the financial climate was perceived to be favourable and credit proposals received were found to be commercially viable. Risk perceptions are based on key available indicators, which keep changing with time. Predictions turn out wrong almost always. The uncertainty level is so high that it is difficult to figure out what the situation would be like a few days later.
With credit growth of banks becoming near stagnant, even with a cut in the lending rate, there are no signs of revival.
Banks should be allowed to carry out their normal functions such as lending instead of being bogged down by the NPA burden.
Srinivasan Umashankar Nagpur
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