Identification And Resolution Of NPA; Regarding Strength Of Our Banks
There was no middle ground. Either we
compromised and continued as such, or demolished the edifice of corruption and
built a new structure. Prime Minister Narendra Modi chose the second. The pain
was real but so was the malaise.
With unidentified NPA and no surety of what lay beneath the
carpet, the job was tough and not for the faint hearted. Even now, the
estimated NPAs are of about Rs. 9 lakh crore. Yes, there was scope for a minor
deviation, but that wouldn't have been enough. Instead, with adequate
provisioning and sufficient liquidity due to recapitalization, the government
has managed to put banks in a position to tide over the crisis.
Genuine failures need hand holding and formulation of an exit
policy. Fraud requires investigation and penal actions on the criminals, apart
from strengthening the control and audit mechanism. Finally, bad quality loans
and substandard assets need a very careful resolution so that the confidence in
the banking institution is not jeopardized, and the money is recovered.
With new legislation such as the Insolvency and Bankruptcy Code,
and the resolution mechanism under NCLT in place, the banking sector now has
the teeth to bring fraudulent corporate houses to book.
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