RBI takes stock of banks’ clean-up act to improve asset quality

Reserve Bank of India governor Raghuram Rajan and his deputies on Monday met chief executives of some of the country's top lenders, private and government, to review the steps taken by the banks to reduce bad loans and discuss ways to address the issue of non-performing assets.

"During the meeting, the RBI and the bankers discussed various issues, including the asset quality and the way forward for improving the quality of banks' balance-sheets. The discussions will continue," the RBI said in a statement.

Union Bank of India chairman and managing director Arun Tiwari, however, said after the meeting that beside the stressed assets situation, economic conditions in general were discussed, adding that there was no specific interaction on stressed account.

"It was an absolute general discussion with open mind on both sides," state-run Union Bank of India's chief, Arun Tiwari, told reporters. Others declined to speak.

Bankers did not also elaborate on the steps discussed with RBI on tackling non-performing loans.

The RBI statement said Rajan was accompanied by his deputies S S Mundra and R Gandhi, and officials from banking regulation and supervision departments.

The meeting assumes significance as it comes days after the central bank authorised banks to convert stressed loans to equity based on merits and prescribed a deadline of March 2017 for lenders to cleaning up balance-sheets.

Rajan, while announcing new enabling steps, had then said bankers had been given lot of leeway like the SDR scheme to take over majority ownership in defaulting companies and the 5/25 scheme of debt rescheduling to get their act together.

Those attended the meeting included SBI's Arundhati Bhattacharya, ICICI Bank's Chanda Kochhar, Axis Bank's Shikha Sharma and Punjab National Bank's Usha Ananthasubramanian, among others.

Other bankers who attended the meet included the chiefs of Bank of Baroda, Bank of India, Syndicate Bank, IDBI, United Bank of India and Andhra Bank.

However, state-run banks are the worst hit by asset quality deterioration and these banks are also are RBI's whipping boys now.