News
LENDING & CREDIT | Cesar Tordesillas, India
view(s)

Some Indian banks misguiding investors on bad loans: Deputy Governor

Reserve Bank deputy governor K C Chakrabarty criticized banks for misguiding investors for the past five years by not giving your proper figures on non-performing assets.

 

Chakrabarty, who oversees the banking services at the monetary authority, also wondered as to how an inanimate object like the "system" can generate NPAs and said the markets regulator Sebi should look into this issue.

He flayed banks for attributing their sudden fall in profits to the computerised system of recognising bad loans and said this is tantamount to misguiding investors.

The market regulator Sebi, who is dealing with listing, should take action against the banks, he insists.

He added that he was wondering how even after computerisation, banks are unable to identify NPAs.

"Was the computer giving wrong figures? he asked"

The deputy governor's comments come in light of a slew of banks, especially the state-run ones like Central Bank of India and Union Bank of India, among others, reporting massive dent in their profits and attributing the same to migration to the system-generated approach of identifying bad loans, over the last fiscal.

Central Bank Chairman and Managing Director M V Tanksale explained that his bank, which ended the last quarter with higher NPAs and restructuring due to power distribution companies' exposure, showed a spurt in NPAs because the other banks got two to three years to migrate while his bank got only nine months.

Union Bank's newly appointed Chairman and Managing Director D Sarkar conceded that in the manual system of NPA recognition, some liberty was taken during external or internal audits, while the new system-based approach takes a very methodological view on the same.

For more.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.