INSUBCONTINENT EXCLUSIVE:
India governor Urjit Patel has warned against the temptation to deploy public sector banks to kick-start growth via mass-scale lending
without proper regulations, as it has the potential to flare up the non-performing asset (NPA) situation again.According to Mr Patel's
presentation to the Stanford University's 19th Annual Conference on Indian Economic Policy, Temptation to reset 'back to the past' should
government-owned banks to pump-prime the economy has the ability to culminate into "a vicious cycle"
He said that as the "government's headroom for running higher fiscal deficits is exhausted, GBs (government-owned banks) are nudged to
(over) lend to pump-prime the economy or boost preferred sectors"."But this leads to higher NPAs over time, which requires equity infusion
Mr Patel blamed stakeholders such as the government, lenders and regulators for failure to play their role in checking the NPA situation
Governor of the Reserve Bank of India from September 2016 to December 2018.He said that banks applied "very little risk analysis and
"government did not fully play its role as principal shareholder and manager of economy's health, he said in his presentation.Besides, he
pointed out that the present level of bank capital masks the future expected capital write-offs
"Provision Coverage Ratio for Indian banks is much lower despite the loss, given that default is considerably higher in India," his
Patel's presentation pointed out that in Indian banks, capital is low relative to NPAs when compared to global standards.Get Breaking
news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com
Catch all the Live TV action on TheIndianSubcontinent 24x7 and TheIndianSubcontinent India
Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.Budget 2019: Find the latest news on
TheIndianSubcontinent.com/budget
Use the income tax calculator to learn about your tax liability
