The system’s GNPA stood at 7.48 per cent as of March, which was the first quarter when lenders had absorbed the post-moratorium impact. According to baseline estimates in the RBI’s bi-annual financial stability report published in July, GNPA is expected to grow to 9.80 per cent in March 2022.
“According to the numbers that we have, the level of NPAs at present looks manageable. The final data, at the end of June, is around 7.5 per cent GNPAs and (for NBFCs) for the banking sector, it is slightly lower than that” Das said.
Banks have a capital buffer of over 16 per cent, while it is 25 per cent for NBFCs, which is well above the regulatory mandate, and will help fight any stress, he added.
The governor explained that the debt restructuring schemes for small borrowers launched in August last year and in May this year are not open-ended, as they insist on start and end dates.
Additionally, they also ask banks to set aside money in the form of a provision for an amount of 10 per cent of the outstanding balance, so that if some asset goes back, they have provisions to take care of it.
Meanwhile, addressing a query on higher deduction by banks in resolving some insolvency cases, Das said the Insolvency and Bankruptcy Code process needs some reforms which will also include some legislative changes.
IBC turns 5: the hits and misses of the Insolvency and Bankruptcy Code
The Insolvency and Bankruptcy Code (IBC) has completed five years from this May. The Act envisages a faster, time-bound option for banks to recover bad loans. Since its implementation, it has undoubtedly been an effective tool for recovery of loans. However, it has not lived up to the expectations of a time-bound recovery. ET’s Joel Rebello counts down his hits and misses.
“Yes, I agree that there is room for improvement IBC and structure. Perhaps some legislative amendments are also needed.”
The RBI has some suggestions that it has flagged to the government, he said, citing an example of the time taken before admitting one case to another. national company law The Tribunal (NCLT) and comes to a solution through measures directed by the Court and suggested that it can be dealt with through legal amendments.
He said the total recovery from the IBC process used to be 45 per cent at the aggregate level four years ago and has come down to 40 per cent in the year of the pandemic, and also acknowledged that in some cases, lenders have had to take deeper up to 90 per cent. Haircuts.
Das said, “There is scope for some improvement and I completely agree that the time taken for the entire process needs to be reduced by simplifying certain procedures and making legislative changes wherever necessary.”