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Top bankers on Wednesday told the Reserve Bank of India brass that despite the economic slowdown, the bad loans situation is not alarming.
According to Mr M. D. Mallya, Chairman, Indian Banks' Association, and Chairman and Managing Director, Bank of Baroda, incremental slippages and restructuring of loan accounts are on expected lines due to the slowdown.
“The NPAs are under control…the situation is not alarming,” said Mr Mallya.
Mr M.V. Nair, Chairman & Managing Director, Union Bank of India, said given that there is pressure on asset quality due to domestic slowdown and external environment, the regulatory authorities want banks to strengthen credit monitoring and step up recoveries.
“NPAs are manageable…….the need for offering the benefit of restructuring to smaller loan accounts by sensitising the rank and file at the branches was emphasised,” explained Mr Nair.
The bankers' meeting with RBI comes following the Governor's announcement at the last post-policy press meet that the central bank will call a meeting of about 10 large banks to discuss the NPA situation and see what measures have to be taken to ensure that the profitability and the viability of our banking system is intact as it is now.
Regulatory dispensation
On whether any relaxation in regulatory dispensation was sought in dealing with loans that were being restructured for the second time, Mr Mallya said that a RBI working group was looking into the matter.
In its latest document on Macroeconomic and Monetary Developments, the RBI said that during the October-December quarter of 2011-12, credit growth slowed down, partly reflecting the slowing economic activity and the portfolio adjustment to the NPA cycle.
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