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The recent case of Syndicate Bank highlights how corporates with poor financial standards can easily get loans by greasing the palms of CEOs at PSU banks.While infrastructure growth is necessary, it should not be at the cost of asset quality.
The Reserve Bank of India (RBI) has raised concerns about the sharp rise of stressed assets in the infrastructure sector, which have shot up from 8.4 per cent to 29.2 per cent in one year till March 2014, its annual report for 2013-14 said.
Excessive lending to the infrastructure sector which was plagued with execution issues is the primary reason for this.
Also, banks, especially PSUs, should adopt a more rational approach and not lend to the sector carelessly. Ordinary borrowers often complain about difficulty in getting loans, while some large borrowers just get it very comfortably.
As they say banks lend money to those who already have enough of it . 😀 Non-performing assets (NPAs) of the banks, especially public sector banks (PSBs), have been going up sharply recently.
According to one of the estimates, the gross non-performing assets (NPAs) of listed banks rose 35.2% to Rs2.43 lakh crore during the first three quarters of the current financial year.
In absolute terms, the 40 listed banks added Rs63,386 crore to their gross NPAs during the nine months till December 2013, with State Bank of India (SBI), the largest lender in the country, leading with an accretion of Rs16,610 crore.RBI proposed to look into the possible legal issues involved and address the same.#wp-subscribe.wp-subscribe-1 #wp-subscribe.wp-subscribe-1 h4 #wp-subscribe.wp-subscribe-1 p #wp-subscribe.wp-subscribe-1 .regular-text #wp-subscribe.wp-subscribe-1 .submit #wp-subscribe.wp-subscribe-1 .thanks #wp-subscribe.wp-subscribe-1 .error #wp-subscribe.wp-subscribe-1 .A Parliamentary panel, examining increasing incidents of NPAs, has observed that state-owned banks should stop “ever-greening” or repeated restructuring of corporate debt to check the constant accumulation of their non-performing assets.Members of the panel were of the view that NPAs are the result of bad economic situation, but there were also management issue of every-greening of loans, which could be avoided by “not renewing loans, particularly of corporate”.The unabated rise in stressed assets of the Indian banking sector is a cause for concern for the economy.The Reserve Bank of India (RBI) India’s central bank brought out a discussion paper on how to tackle the problem of rising NPAs The problem is acute particularly among the state-owned Public Sector banks.The rising NPAs have set the alarm bells ringing all across.The finance ministry has asked banks to work on ways and means of recovering NPAs at the earliest.Government should take steps to improve the working environment in the infrastructure sector.This shall improve the repayment capacity of the companies.