RBI WARNS ON NPA SPIKE IN MUDRA LOANS

Cen­tral bank fears hike in non-per­form­ing as­sets may plague bank­ing sys­tem again

The Gulf Today - Business - - FRONT PAGE -

NEW DELHI: The Re­serve Bank of In­dia (RBI) has raised a red­flag on the spike in non-per­form­ing as­sets (NPAS) un­der the gov­ern­ment’s flag­ship scheme to sup­port mi­cro en­ter­prises in the coun­try un­der the ti­tle the Prad­han Mantri Mudra Yo­jana (PMMY). The bank loans pro­vided un­der the Prad­han Mantri Mudra Yo­jana is called Mudra loans.

Ac­cord­ing to Fi­nance Min­istry sources, RBI has cau­tioned the min­istry that the scheme might turnout to be the next big source of NPAS, which have plagued the bank­ing sys­tem.

The cen­tral bank has flagged that bad loans un­der PMMY have risen to Rs11,000 crore.

As per the an­nual re­port of PMMY, 2017-18, to­tal dis­burse­ments un­der the scheme stood at Rs2.46 tril­lion in FY 18.

Out of this, 40 per cent were dis­bursed to women en­trepreneurs and 33 per cent to social cat­e­gories. More than 4.81 crore mi­cro bor­row­ers have ben­e­fited through PMMY dur­ing the year FY2017-18.

The PMMY was launched on April 8, 2015. Un­der the scheme, banks are re­quired to fi­nance mi­cro and small en­trepreneurs for up to Rs10 lakh. Loans can be granted un­der three cat­e­gories - up to Rs50,000 un­der ‘Shishu’; Rs50,001-rs5 lakh un­der ‘Kishore’ and be­tween Rs5,00,001 and Rs10 lakh un­der ‘Tarun’ cat­e­gory.

In ad­di­tion, RBI’S cau­tion comes at a time when the coun­try’s fi­nan­cial sys­tem in reel­ing un­der se­vier stress due to the IL&FS cri­sis which con­tin­ues to hurt banks with im­pair­ments, the most re­cent case be­ing In­dusind Bank.

On Jan­uary 9, In­dusind Bank in its lat­est quar­terly earn­ings re­sult state­ment with­out nam­ing the IL&FS Group, said: “Ad­vances granted to var­i­ous com­pa­nies and SPVS be­long­ing to a Group in the in­fra­struc­ture sec­tor against cer­tain iden­ti­fied cash flows and per­tain­ing to spe­cific as­sets are ‘Stan­dard’ as at De­cem­ber 31, 2018 on the ba­sis of the con­duct of the ac­counts till date.

“Since Oc­to­ber 1, 2018, cer­tain governance and man­age­ment changes have taken place in the Group and mea­sures to turn it around through a Res­o­lu­tion Plan are un­der­way.”

The bank said it was mon­i­tor­ing the devel­op­ments and im­pli­ca­tions of the ‘Res­o­lu­tion Plan’.

“In the in­terim, as a pru­den­tial mea­sure, the bank has made a con­tin­gent pro­vi­sion of Rs255 crore on these ‘Stan­dard’ as­sets dur­ing the quar­ter ended on De­cem­ber 31, 2018, in ad­di­tion to an amount of Rs275 crore made dur­ing the quar­ter ended on Septem­ber 30, 2018.

FOREX RE­SERVES UP

In­dia’s for­eign ex­change (forex) re­serves rose by $2.68 bil­lion dur­ing the week ended Jan­uary 4, an of­fi­cial data showed.

Ac­cord­ing to RBI’S weekly sta­tis­ti­cal sup­ple­ment, the over­all forex re­serves in­creased to $396.08 bil­lion from $393.40 bil­lion re­ported for the week ended De­cem­ber 28.

In­dia’s forex re­serves com­prise For­eign Cur­rency As­sets (FCAS), gold re­serves, spe­cial draw­ing rights (SDRS) and In­dia’s po­si­tion with the In­ter­na­tional Mon­e­tary Fund (IMF).

FCAS, the largest com­po­nent of the forex re­serves, edged higher by $2.21 bil­lion to $370.29 bil­lion dur­ing the week ended Jan­uary 4.

Be­sides the US dol­lar, FCAS con­sist of 20-30 per cent of other ma­jor global cur­ren­cies.

Agence France-presse

A man speaks on his cell­phone out­side the Re­serve Bank of In­dia head­quar­ters in Mum­bai.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.