Worried Banks to Petition RBI on Bad Loan Tag
Putting NPA label on loans to state will severely hurt small lenders, fear bankers
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)