Clearing air from speculation over the central bank extending the timeline for bank cleanup, Reserve Bank of India (RBI) Deputy Governor N S Vishwanathan has said that a deadline of March 2017 for banks to clean up stressed assets from their balance sheets still “stands”.
Earlier, RBI governor Urjit Patel spoke of ‘pragmatic approach’ in dealing with NPA resolution, in a shift from his predecessor Raghuram Rajan's 'deep-surgery' policy on bad loans, saying that the RBI will be firm but pragmatic in dealing with bank NPAs so that the economy does not feel lack of credit to support growth. The statement led to speculation that the March 2017 deadline been set by the previous RBI governor, Raghuram Rajan may get extended.
Vishwanathan also said the incremental addition of stressed assets in banks was coming down and the trend is seen across the sectors. He added that bad loans in the infrastructure sector are close to 16-17 per cent of the total advances, it is an important issue and we need to have various ways to deal with it. He said the structuring of infrastructure financing has to be very correct as their projects have long gestation and emphasized that these are long gestation project that need to have a proper mix of equity and loan funding.
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