State Bank of India Chairman, Rajnish Kumar stated that,”The government, industry and the judiciary too played a role in the buildup of India’s non-perfoming assets (NPA).
While addressing a Banking Conference he stated that,“I would say everybody is responsible, be it the bankers, be it the industry or borrowers, be it the government, and without inviting contempt of the court, even the judiciary has played a role in this situation”.
Kumar stated that NPAs for public sector banks were higher due to government-sponsored schemes and targeted lending.
While commenting on Insolvency and Bankruptcy Code and the Reserve Bank of India’s February 12 circular on speedier recovery of bad loans, Rajnish Kumar added that these two rules were game-changers.
He stated that,“These laws will bring discipline in credit markets which was lacking prior,” he said, adding every capitalist economy needed an insolvency court.
He said the relationship between bankers and the industry was built on trust. “In several cases there has been a serious breach of that trust, maybe the verification process was missing.”
Delayed response by bankers was also a factor in aggravated NPAs, he said.
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