The Hindu Business Line : Recovering loans

The introduction of the 90-day norm by the RBI for identification of non-performing assets (NPA) by banks appears a little premature for the Indian banking industry.

This step will increase the level of NPAs. . To keep a check on the rising incidence of NPAs, the banks need a good system of loan appraisal, a regular team for recovery of bad loans, flexible recruitment polices, supportive legal system and insolvency laws.

While the commercial banks have standardised the loan appraisal mechanism, they seem to be lagging behind in setting up recovery teams.

The steps that need to be taken are: Setting up a recovery team by banks and changing the archaic labour laws of the country. The new sector private banks, such as ICICI Bank and HDFC Bank, are franchising these jobs to outsiders.

The old private and public sector banks have to revamp their credit administration. This will help these banks to arrest the rising incidence of NPAs, meet the competition head on and remain a dominant force in the Indian banking industry.

P. Ezhilarasu

E-mail

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

More Stories on : Letters | Securitisation | Non-Performing Assets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
A laboured view

Elections and agriculture: Poor crop of plans and policies

Chemical sector: Get equation right

Unctad's role: Renewed commitment needed

Rupee rise: Opportunity and challenge?

Enthralling election

Patents (Amendment) Bill, 2003: The inevitable regime change

Creating a benchmark

Recovering loans