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The Finance Minister, Mr Pranab Mukherjee, expressed hope that banks identified by the Reserve Bank of India for appropriate NPA management would take the advice and act accordingly.
The central bank had recently advised “select banks” to take necessary steps to address the deteriorating asset quality and arrest non-performing assets, Mr Mukherjee said in his address at a Bank of India event here on Monday.
On the occasion, Mr Mukherjee launched BOI's 4001st branch at Imphal in Manipur. He also launched 1,501 ultra small branches of Bank of India under financial inclusion programme, Apoorva Agriculture Product Innovation Cell and the joint venture ‘BOI AXA Asset Management Company'.
Mr Mukherjee said that banks have to tread cautiously on the risks confronting the banking sector, especially risks arising out of asset quality, market volatility and global downturn. “Bank of India needs to tighten its belt not only to arrest NPA but also to reverse the trend of asset quality deterioration through better professional supervision”, a written speech later circulated by the Finance Ministry quoted Mr Mukherjee as saying.
Meanwhile, the Financial Services Secretary, Mr D.K.Mittal, later told reporters that the current gross NPA level of over 3 per cent for 2011-12 was a matter of concern, but there was no need to panic. “Indian banking system is much sounder than the European system,” he said.
Mr Mittal highlighted that there was continued efforts to address the NPA issues in the Indian banking system. Asked whether the Government, in consultation with the RBI, was contemplating a special dispensation for asset recognition in the wake of the current difficult economic environment, he replied in the negative. “There is no need for separate dispensation. Banking system has to face the challenge,” he said.
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