Business

Lenders told to prepare road map to fix NPA woes


Lenders told to prepare road map to fix NPA woes

Parliament panel enquires about ‘nepotism’ in ICICI Bank-Videocon deal

New Delhi : A parliamentary panel on Monday asked the Indian Banks’ Association (IBA) to prepare a road map for addressing the issue of mounting bad loans and also posed queries on the alleged “nepotism” by ICICI MD and CEO Chanda Kochhar in a loan to Videocon Group.

During a meeting between the bankers and the Parliamentary Standing Committee on Finance, headed by Lok Sabha MP Verappa Moily, it was emphasised that corporates should not be painted with a same brush as all are not wilful defaulters, said sources.


Non-performing assets (NPAs) touched Rs 8.31 lakh crore at end-December 2017.

Among others, IBA Deputy Chairman and SBI chief Rajnish Kumar and PNB MD Sunil Mehta briefed the panel on various aspects of non-performing assets (NPAs) and banking frauds.

Senior advisor of IBA Alok Gautam was also present in the meeting, sources added.

RBI Governor Urjit Patel too will brief the committee later this month.

Sources said that some of the members had questions on allegations against Kochhar. One of the member wanted to know if “nepotism” was also going on in private sector banks.

Sources further said TMC MP and member of the panel Dinesh Trivedi wondered why pubic money was being used to recapitalise the state-owned banks which are losing money due to frauds and defaults by corporates.

Some members quizzed the bank officials whether “aggressive lending” during the successive UPA governments was the reason for the mounting NPAs in the banking system, especially in state-owned lenders.

Gross NPAs of state-owned banks had crossed Rs 7.77 lakh crore at the end of December 2017, according to official data.

BJP MP Nishikant Dubey said Indian banks need not adhere to international capital adequacy norms (Basel-III) as it is leading to more provisioning of capital, sources said. The committee was earlier briefed by Financial Services Secretary Rajiv Kumar about issues related to the banking sector.

Former Prime Minister Manmohan Singh also attended the meeting.

Sources said the issue of merger of banks also came up at the meeting with some members suggesting the need to be extra careful as it involved “different cultures” besides “chemistry”.

They said the proposal of merger of different banks was not the same as merger of associates of State Bank of India.

Sources said the PNB chief was asked about the multi-crore fraud involving jeweller Nirav Modi.

The sources said that bank officials told the members that scams were being dealt with separately and did not represent a systems failure.

Fitch lowers PNB viability rating on weak credit profile

New Delhi: Fitch Ratings on Monday lowered viability rating of fraud-hit Punjab National Bank, citing significant deterioration in its credit profile and oversight gaps. The viability rating (VR) has been downgraded to ‘b’ from ‘bb-‘ and maintained on ‘rating watch negative’ (RWN).

“The two-notch downgrade to PNB’s VR is a reflection of the significant deterioration in its standalone credit profile, mainly due to a drop in its core capital ratio that was bigger than Fitch’s expectation,” the global rating agency said. VRs represent the capacity of the bank to maintain ongoing operations and to avoid failure. The deterioration in its core capitalisation was caused by a sharp increase in its non-performing loans (NPLs), including the $2.2 billion in fraudulent transactions reported in February 2018, and the related increase in credit costs, which resulted in large losses in the financial year ended March 2018 (FY18).




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