Next after FM statement,Banks Must Not Judge anybody’s viability for Loans, Prime Minister Modi has advised the MD & CEOs of the banks/NBFCs not to treat all credit proposals with the same yardstick and ensure that the borrowers must not suffer in the name of previous NPAs. He also urged banks to motivate small entrepreneurs, self-help groups, and farmers to use institutional credit to meet their credit needs and grow.
As Reported by FE, PM Modi said that each bank needs to introspect and revise if needed its practices to ensure stable credit growth. Reassuring the government’s support, he added that the government is firmly behind the banking system. He also advised banks to adopt financial technology such as centralized data platforms, digital documentation, and collaborative use of information to move towards digital acquisition of customers.
Also Read – Now RBI Requests PM to Cut Government Stake in PSU Banks to 26%
The centre said that the move will help increase credit penetration, increase ease for customers, lower costs for banks, and also reduce frauds.
Where as RBI anticipated that the The Reserve Bank of India has projected that NPAs may shoot up in the coming months. Whereas, given the circumstances, the RBI Governor Shaktikanta Das has advised the banks to remain extremely watchful and focused.
In July’s Financial Stability Report, it showed that the gross NPA ratio of all banks may increase from 8.5 per cent in March 2020 to 12.5 per cent by March 2021 under the baseline scenario. NPAs may deepen further in case the macroeconomic environment worsens as the ratio may escalate to 14.7 per cent under the very severely stressed scenario.
