Worst behind banking industry on NPA front: Kochhar

As Indian banks battle a sharp rise in bad loans over the recent past, top banker Chanda Kochhar says there could be some more addition to the non-performing assets for the industry during the current fiscal but the worst appears to be over.

"There will be some addition to NPAs and the restructured assets to the banking industry, but I think these additions in FY14-15 should be less than the additions in FY13-14. In that sense, we can assume that the peak is behind us and gradually now there should be an improvement," ICICI Bank's Managing Director and CEO Chanda Kochhar said.

"On the retail side of the business, the quality of assets is very stable and payment track records, at least on secured business such as housing loan, car loan etc, are very satisfactory and so that part of the business is very stable.

"On the project side, in fact, one expects that as decision-making starts and as projects start getting last-mile clearances, any stress or tightness on cash flows should get lifted and the things should look better," Kochhar told PTI in an interview.

At the same time, Kochhar warned that the continuing stress on the corporate sector as a whole would still impact the cash flows and therefore the non-performing assents (NPAs) could still continue to rise, although at a slower rate than the last fiscal.

Reserve Bank Governor Raghuram Rajan had also said last week that the most immediate problem confronting the banking system was that of rising level of stressed assets.

"Fortunately in the last quarter those levels of stressed assets tapered off or flattened out. But, it is too early to declare victory," Rajan had told reporters after the central board meeting of RBI in Chennai.

The problems related to NPAs are said to be relatively more severe for public sector banks. According to a recent RBI report, industries such as infrastructure, iron and steel, textiles, mining and aviation account for a significant share of total stressed assets (NPAs and restructured advances) of banks, especially those in the public sector.

"This is also reflected in the relatively lower profitability of public sector banks," RBI said in its latest Financial Stability Report.

Talking about the CDR (Corporate Debt Restructuring) mechanism of banks, Kochhar said that the banks use it as a mechanism "where at least all bankers come together and take a decision.

"It has to be viewed as a mechanism that just makes the process possible and not really as something which attracts the cases which are not supposed to be dealt through CDR. So, I think this is a facilitative decision making process which allows collective decision making to happen so that things could move faster.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • The current value of the rupee does not merit market intervention

    The rupee, losing 40 paise per month against the dollar since May, is expected to remain under pressure till the calendar runs out on December 31, bef

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Sustainable model for rural sanitation

Prime minister Narendra Modi has promised to build a toilet ...

Zehra Naqvi

How smells evoke strong memories

Remember that time when a passing fragrance transported you to ...

Dharmendra Khandal

Indian zoos need a fresh approach

Recently, when a man jumped in a tiger trench of ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture