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Letters: NPA rules are just fine

Source : BUSINESS_STANDARD
Last Updated: Sun, Aug 26, 2012 20:03 hrs

Apropos the report “SBI chief wants NPA rules tweaked” (August 24), banks have umpteen ways of camouflaging non-performing assets (NPAs) and what is finally disclosed is only a percentage of actual NPAs; the Reserve Bank of India (RBI) has absolutely no way of arriving at the correct position of NPAs. The norms for arriving at NPAs have been fixed and are based on international standards. It is for banks to discipline borrowers and educate them to adhere to regulatory requirements. NPAs have to be kept as low as possible and the loss on account of NPAs can’t be expected to be subsidised by any other stakeholder of the bank.

As far as the cash reserve ratio (CRR) is concerned, RBI has monetary responsibilities and it has to ensure that the macro-economic fundamentals are not only strong but also stable. The chief of India’s largest commercial bank should appreciate the role of RBI and its responsibility to ensure economic growth and price stability for which financial stability and banking stability is a must.

T V Gopalakrishnan, Mumbai

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