Wor­ried Banks to Pe­ti­tion RBI on Bad Loan Tag

Putting NPA la­bel on loans to state will se­verely hurt small lenders, fear bankers

The Economic Times - - Front Page -

Mum­bai | Chandi­garh: Banks that have ex­tended loans of .₹ 12,000 crore to fund the Pun­jab govern­ment’s food­grain pro­cure­ment pro­gramme will meet RBI of­fi­cials next week to try and avoid tak­ing a hit on their books. RBI has told the lenders to mark the loans as po­ten­tial non-per­form­ing as­sets and pro­vide for them be­cause the food stocks can’t be ver­i­fied. That’s jolted the banks, which have tra­di­tion­ally as­sumed loans to state govern­ments to be sov­er­eign debt in no dan­ger of de­fault. The Pun­jab govern­ment has de­nied any mis­use of funds.

“Funds availed by the state govern­ment on ac­count of food credit lim­its have been utilised for food pro­cure­ment oper­a­tions, in the na­tional in­ter­est,” the govern­ment told ET in a re­lease. “There has been no misu­til­i­sa­tion of funds, and… the dif­fer­en­tial amount is on ac­count of dif­fer­ence be­tween claims and amounts re­ceived.” meet on Mon­day to strate­gise on way for­ward

ex­po­sure of 12,000 crore to Pun­jab govern­ment with re­gard to FCI to food credit is close to

1 lakh cr

banks may be hit by RBI direc­tive

San­gita Me­hta & Viney Sharma They have to make pro­vi­sion of 15% spread over two quar­ters (March & June)

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