The Reserve Bank of India (RBI) has directed banks to put in place an effective information sharing mechanism by end-December 2012, to address the issue of rising non-productive assets (NPAs) and restructured advances of banks.
This will help banks to use information on credit, derivatives and unhedged foreign currency exposures of prospective borrowers.
Effective 1 January 2013, any sanction of fresh loans / ad-hoc loans/renewal of loans to new or existing borrowers should be made only after obtaining/sharing necessary information, as per the RBI directive.
RBI will view non-adherence to these instructions seriously and banks would be liable for action, including imposition of penalty wherever considered appropriate, an official release said today.
NPAs of nationalised banks as a whole increased to Rs 33,699.12 crore at the end of September 2012 from Rs 27,637.84 crore at end-September in the previous fiscal. The regulatory and supervisory measures are aimed at reducing growth in NPAs and restructured advances by banks and are being closely monitored by the RBI on an ongoing basis, minister of state for finance Namo Narain Meena informed the Rajya Sabha in a written reply today.
Total non-performing assets of scheduled commercial banks in the country rose to Rs 62,602.57 crore at the end of September in the 2011-12 financial year from Rs 56,332.30 crore during the similar period of the previous fiscal (2010-11). Among state-run banks, the share of the State Bank group stood at Rs16,300.15 crore at end-September 2012 against Rs15,359.00 crore as of end-September 2011.
As a percentage of gross advances, NPAs of all scheduled commercial banks increased to 3.57 per cent of gross advances at end-September 2011-12 from 2.94 per cent in 2010-11. Total NPAs with all public sector banks rose to 4.01 per cent at end-September 2011-12 from 3.17 per cent in the previous year.
NPAs of nationalised banks rose to 3.5 per cent as of end-September 2011-12 from 2.67 per cent during the comparable period of the previous fiscal. The State Bank group had the highest NPA of 5.16 per cent at end-September 2011-12 against 4.36 per cent during the comparable period in 2010-11.
RBI has also asked banks to monitor their NPAs and take steps to bring them down through upgradation/ recovery/prudential write-off. The government has, meanwhile, advised public sector banks (PSBs) to take a number of new initiatives to increase the pace of recovery and manage NPAs, which include appointment of nodal officers for recovery, conducting special drives for recovery of loss assets, putting in place early warning system, replacing system of post-dated cheques with electronic clearance system (ECS), e-auctions, sharing of credit information through CIBIL, assigning of loss assets on incentive basis to asset reconstruction companies and giving weightage to recovery of NPAs in statement of intent on annual goals of PSBs, the minister added.
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