The Indian Prime Minister asked the Indian bankers to desist from being 'lazy'. The fortright approach is welcome plain speak in a sector that has been pampered. Since the 1992 reforms Government has pumped in quite a bit of money as capital infusion in to these banks. Stress tests by the Reserve Bank of India reveal a huge quantum under stress. Credit portfolio appears to be infected
"Growth in bank credit and deposits has been relatively low in the recent past. Slowdown in credit growth has been broad-based barring agriculture and allied activities . Low credit growth reflects a combination of factors such as reliance on alternative sources of funding, balance sheet repair and slack in demand as also an element of risk aversion"....
"Growth in bank credit and deposits has been relatively low in the recent past. Slowdown in credit growth has been broad-based barring agriculture and allied activities . Low credit growth reflects a combination of factors such as reliance on alternative sources of funding, balance sheet repair and slack in demand as also an element of risk aversion"....
"Stressed
advances increased to 10.7 per cent of the total advances from 10.0 per cent
between March and September 2014. PSBs continued to record the highest level of
stressed advances at 12.9 per cent of their total advances in September 2014
followed by private sector banks at 4.4 per cent." (Reserve Bank of India)
No wonder why the PM presented himself before the CEOs and asked them to mend their ways. Heard stressed assets are many, those unheard may be even more. The NPA figures may see an accretion ... given that there is name lending, cronyism, restrictive unions who encourage disguised unemployment and giveaways without accountability. That must be worrisome for a reform oriented government.
The bell tolls...
About time for a great clean up? Sell on the retreat and buy on the fact?
Views expressed without risk or responsibility.
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