RBI cautions lenders on bad debt

Mumbai, Feb 9: The Reserve Bank of India (RBI) Monday said it has cautioned lenders on the need to improve asset quality and curtail non-performing assets (NPAs) which have increased in the recent past. Speaking to reporters here, RBI's Deputy Governor R. Gandhi said asset quality has always been a concern following the global financial crisis. "We have been continuously cautioning banks about slippage of stressed assets and we have been guiding banks in recovering," Gandhi said. The prolonged and steep economic downturn, accompanied by high interest rates, has led to a sharp deterioration in asset quality for the banking sector and increased the pressure of NPAs. The percentage of gross non-performing assets (GNPAs) for the banking sector is expected to worsen from 3.9 percent of advances in fiscal 2013-14 to about 4-4.2 percent in 2014-15, Moody's analyst ICRA has said in a report. ***** and restructured loans crossed 10 percent of all loans in mid-fiscal 2013-14 and are expected to touch the 15 percent mark by the end of the financial year 2014-15.