Blaming the UPA regime, RBI Governor Urjit Patel on Saturday described high non-performing assets (NPAs) “a legacy issue”, as long-gestation projects funded before 2011-12 were responsible for it.
Patel’s assessment comes days after Parliament, during the Budget Session, witnessed a verbal duel over Finance Minister Arun Jaitley’s remark that “over management of banks” by the previous Manmohan Singh government led to accumulation of NPAs.
Congress leader Veerapa Moily had denied the charge, making a counterclaim that bad loans had surged due to the mismanagement of banks during the Narendra Modi regime. The NPA was at 4% at the time of the UPA’s exit, but now it has grown to over 9% on record, Moily had said.
Patel said NPAs have been plaguing banks for long, but the issue was being recognised only recently. “Therefore, ...by definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently,” the RBI governor stressed. Following his address to the RBI board in the national capital on Saturday, Jaitley, too, hinted at inheriting bad loans from the UPA government.
He said NPA figures spiralled owing to new NPAs or continuing loans. The minister pointed out that a legal and executive framework to tackle bad loans has been put in place as its resolution is an ongoing process.
The Parliamentary Standing Committee on Finance, headed by Moily, in its latest report had sought a forensic audit of restructured loans. The panel had suggested constituting empowered committees at the level of the RBI, banks and borrowers to keep an eye on loans of large volume.
Questioning the NPA redressal mechanism, the committee had expressed fear that bad loans with public sector banks may go up to Rs 4 lakh crore by the end of this fiscal.
Patel’s assessment comes days after Parliament, during the Budget Session, witnessed a verbal duel over Finance Minister Arun Jaitley’s remark that “over management of banks” by the previous Manmohan Singh government led to accumulation of NPAs.
Congress leader Veerapa Moily had denied the charge, making a counterclaim that bad loans had surged due to the mismanagement of banks during the Narendra Modi regime. The NPA was at 4% at the time of the UPA’s exit, but now it has grown to over 9% on record, Moily had said.
Patel said NPAs have been plaguing banks for long, but the issue was being recognised only recently. “Therefore, ...by definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently,” the RBI governor stressed. Following his address to the RBI board in the national capital on Saturday, Jaitley, too, hinted at inheriting bad loans from the UPA government.
He said NPA figures spiralled owing to new NPAs or continuing loans. The minister pointed out that a legal and executive framework to tackle bad loans has been put in place as its resolution is an ongoing process.
The Parliamentary Standing Committee on Finance, headed by Moily, in its latest report had sought a forensic audit of restructured loans. The panel had suggested constituting empowered committees at the level of the RBI, banks and borrowers to keep an eye on loans of large volume.
Questioning the NPA redressal mechanism, the committee had expressed fear that bad loans with public sector banks may go up to Rs 4 lakh crore by the end of this fiscal.