NPA in Banks are Alarming
Though volume of NPA in Public sector banks has been rising quarter after quarter ,RBI may be right in saying that volume of NPA in PSBs is not alarming as of now because in case of any eventuality PSBs can meet the crisis by their own capital which is at least 9% as per Bale committee recommendation.
But the matter of real concern is that most of banks are facing liquidity crisis , borrowing money in lacs of crores from RBI and where scope of lending is very much reduced due to inaction of government on needs of corporate sector , it is unavoidable that in near future quantum of bad assets will grow at faster rate whereas lending at lower rate which will result in rise in Gross NPA to total Advances Ratio .
Days are not far when even capital of banks will face sharp erosion and government will also fail to protect the real interest of depositors, investors and shareholders.
To add fuel to fire , corrupt officials are busy in bad lending and corrupt legal system is unable to recover the money from will defaulters of public sector banks.
But the matter of real concern is that most of banks are facing liquidity crisis , borrowing money in lacs of crores from RBI and where scope of lending is very much reduced due to inaction of government on needs of corporate sector , it is unavoidable that in near future quantum of bad assets will grow at faster rate whereas lending at lower rate which will result in rise in Gross NPA to total Advances Ratio .
Days are not far when even capital of banks will face sharp erosion and government will also fail to protect the real interest of depositors, investors and shareholders.
To add fuel to fire , corrupt officials are busy in bad lending and corrupt legal system is unable to recover the money from will defaulters of public sector banks.
Read the news published in Economic Times Today on 1st of March 2012
NPA levels not alarming, banks to RBI
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http://dkjain497091112006.blogspot.in/2012/02/rise-in-non-performing-assets.html
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