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Rising NPAs in the banking system are not a problem of today, but banks must improve their risk management capabilities, a senior RBI official has said.
“Banks are declaring NPAs, which are on the rise. Still we feel NPAs are not a problem. Banks will be able to manage,” Dr K. C. Chakrabarty, RBI Deputy Governor, told reporters on Saturday.
He was in the Capital to deliver the convocation address at the International Management Institute (IMI), a business school.
Dr Chakrabarty also said that banks need to improve their risk absorption capacity to withstand non-performing assets (NPAs).
At the same time, he made it clear that his assessment on NPAs cannot be any different from what banks themselves have assessed.
“We are not saying it (rising NPAs) is any alarming thing. If NPA is going up, then yes it is matter of concern and banks must initiate corrective measures to see that NPA is contained,” he said.
Moderation in growth
On moderation in economic growth, Dr Chakrabarty pointed out that the RBI Governor, Dr Subbarao, had already told in the annual policy statement that he sees growth moderation. “That (moderation) is happening. This was expected by RBI,” he said, adding that RBI's monetary policy was tight because of inflation.
He asserted that one would have to wait till June 16 (policy review meeting) to know if monetary policy will be further tightened or the central bank will take a pause in the wake of GDP growth moderation.
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