The Hindu Business Line : Bankers' woes

With the introduction of prudential norms, the assets of the banks are classified as non-performing assets (NPAs) if the borrower fails to service either interest or instalments of loans for 90 days.

Contractors' accounts have become most vulnerable for bankers to manage. Before introduction of prudential norms, bankers were happy to advance to contractors by taking collateral security in the form of mortgage of lands, plots and properties.

But now they are very hesitant to lend to contractors because, in most of the cases, the latter do not receive payments in time from government departments. A friend of mine, a senior manager working for a public sector bank, spent many a sleepless night worrying about a certain contractor's overdue loan instalment.

When the contractor failed to get the payment from the concerned government department on the last day of the financial year, the NPA level of my friend's branch ballooned and, virtually overnight, he was branded a `non-performing' manager'.

Another leading contractor feels that the NPA concept is applicable only to the borrowers and not to the government department. The contractors, many of them honest, are silent spectators to the woes of bankers.

There is an urgent need for the RBI to come out with a separate set of NPA norms for contractors, especially those undertaking projects for the government. This ease the mental agony of many a branch manager.

Vasudev S. Katagade

Hubli

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