Piling up of bad loans would have hit the banking sector by nearly R2.7 lakh crore — about 60% more than the currently reported non-performing assets of Rs 1.8 lakh crore — if it wasn't for regulatory forbearance of the RBI. Since 2008, RBI had relaxed norms for restructured loans several times and allowed lower provisioning for select categories of loans. The central bank's well-intentioned regulatory relaxations have prevented a rise of nearly R90,000 crore in the NPAs. These relaxations include allowing unsecured loans to micro-finance companies to be restructured in 2011, and recently allowing second restructuring of loans on a case-to-case basis. State electricity boards and the aviation sector are two notable examples wherein loans were restructured for a second time, but were not classified as non-performing assets.
Source : Financial Express
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