In a recent interview, the Deputy Governor of Reserve Bank of India / RBI, Mr. S S Mundra mentioned a few points that the banks have to follow.
Mundra thus, stressed on the fact that the banks have to now start reducing the number of loans to one borrower.
The Deputy Governor also added that it is time that risk management strategies are worked on.
In a quick tete – a – tete, he has also added few points that have to be highlighted. Let us have a look at what Mr. Mundra has to say about the Banks and their Lifestyle these days.
S S Mundra’s Take on Banks
When asked about the RBI’s AQR / the Asset Quality Review, he said that tools namely Strategic Debt Restructuring as well as the Joint Leaders’ Forum are already in place.
However, as these did not work, they opted for the AQR.
He also added that banks will now have to focus their energies on the Risk Management besides avoiding Concentrating Risk and Increase in Work.
This will help banks to not to be recalled for any reason and they can work perfectly.
Will AQR / Asset Quality Review be Required Every Year?
To this question, the Deputy Governor said that AQR is not to be conducted on a regular basis. However, it was conducted this time so that the borrowers understand the importance of banks while on the other hand banks have also learnt their lesson.
Gross NPA Ratio
Till December of 2015, the Gross NPA stood at 6 .24 % whereas the Total Stressed Asset (that is NPA + Written – off Accounts + Restructured Assets) was 14 .5 %.
With some of the accounts in the NPA category, there are chances that overtime they will improve their status and grow.