Govt, judiciary responsible for NPA pile-up, too: SBI MD
PSU banks have seen a higher NPA ratio overthe compulsion of supporting government-sponsored schemes, SBI’s MD & CEO Rajnish Kumar ( pictured) has said. “Everyoneis responsible, be it the bankers, the industry, borrowers, or the government and without inviting contempt of the court, even the judiciary has played a role,” he said.
The industry, government and judiciary have also played a role in the build up of non-performing assets (NPAs), along with the banking system, State Bank of India (SBI) MD & CEO Rajnish Kumar said on Monday.
“I would say that everybody is responsible, be it bankers, industry or borrowers, government and without inviting contempt of the court, even the judiciary has played a role in this situation,” he said, addressing a banking conference.
On the government side, he said that NPAs for PSBs are higher due to government-sponsored schemes and targeted lending. He also said that payments from the government are often late and this delay is not factored into the bank’s models. He also cited an example where an assurance on availability of coal by the government was cancelled 20 years later.
Commenting on the Insolvency and Bankruptcy Code and the Reserve Bank of India’s (RBI’s) February 12 circular on speedier recovery of bad loans, he said that these two rules are a game changer. “These laws will bring discipline in credit markets, which was lacking earlier,” he said.