Deadline for banks
In a significant announcement on Tuesday, Reserve Bank of India Deputy Governor NS Vishwanathan said March 2017 would remain the deadline for banks to clean up their balance sheets. The central bank had set a March 2017 deadline for banks to reveal bad loans on their books thoroughly under the former RBI Governor. Vishwanathan said the rise in the number of stressed assets was coming down across several sectors. Indian banks reported a 96 percent spike in non-performing assets to Rs 6,29,774 crore in June 2016 from Rs 3,20,553 crore during the same month last year.
The data was made available after the Reserve Bank of India ordered an asset quality review. One of the major tasks that former RBI Governor Raghuram Rajan has undertaken during his tenure is the proposed clean-up of bank balance sheets initiated under the central bank’s Asset Quality Review, much to the chagrin of wasteful major corporate borrowers. The RBI’s asset quality review covered 36 banks (including all those in the public sector). Its latest Financial Stability Report is full of bad news. Fearing a worsening situation of bad loans in the country, the central bank recently announced that the gross non- performing assets of the banks could rise to as high as 9.3 percent in 2016-17, before any hopes of any improvement.