MUMBAI: The joint action plan of the Reserve Bank of India and the finance ministry to tackle bad loans will have sector-specific and size-specific mechanisms, RBI Deputy Governor S S Mundra said.
Revealing little about the proposed tool, Mundra said there were no clear acknowledgement and recognition of the asset quality situation and no-one-size-fits-all solution. Already, an alphabet soup of NPA resolution mechanisms like CDR, SDR, joint-lenders forum etc, exist, but little has been achieved, while stressed assets have been piling up.
“We will not move back to the days of forbearance. Further creeping forebearance in the treatment of bank losses is untenable and costly for the rest of the economy,” said Urjit Patel, governor, RBI addressing the media here on Thursday.
According to Mundra, the positives achieved by the banks include a slowdown in the accretion of fresh NPAs and stable provision coverage ratios. Even as speculation about an impending new instrument is growing, Mundra said there can be a “relook” at the existing instruments.
“The message that we are trying to give is that all these instruments are meant for resolution in a serious sense and not for postponement of the problem. That will be the focus going forward,” he said.