Banks must watch asset quality closely, cautions RBI

Banks need to step up efforts to resolve their existing non-performing assets and tighten their credit management systems, said the Reserve Bank of India in the Report on Trend and Progress of Banking in India 2010-2011. The concern is that the recoveries have not kept pace with slippages since 2007-08. “Rising interest rates and substantial amount of restructuring done during the crisis period, if not done with due care, are likely to put further pressure on asset quality of banks,” the RBI said. The central bank has also warned that the asset quality of banks needs to be closely watched in the changing interest rate environment as the sticky loan portfolio of small and medium enterprises might rise.

Source : The Hindu Business Line