Banks are duty-bound to protect depositors' money: President

President Pranab MukerjeeBanks are trustees of the depositors' money and they have a sacred responsibility to protect the money of those who have reposed their trust in them, President Pranab Mukerjee told bankers at a function today.

Speaking at the centenary celebrations of Karur Vysya Bank at Chennai today, the President drew attention to the increase in stressed assets and lowered profitability of banks. He pointed out that stressed advances to gross advances of scheduled commercial banks have increased from 10.90 per cent in March 2015 to 11.40 per cent in March 2016.

The aggregate provisions made by all scheduled commercial banks have consequently increased from Rs73,887 crore for the year March 2015 to Rs1,70,630 crore for the year ended March 2016.

This, he pointed out, has resulted in a shrinking of resources available for credit disbursement by commercial banks.

The President had a word of praise for the just retired RBI governor Raghuram Rajan's efforts to clean up more than $100 billion of stressed assets on the books of banks.

"Of course more than often you listen to NPAs of banking system, which is no doubt a matter of concern. And governor of RBI who has just retired, Mr Rajan, took many appropriate steps to put the system in the right direction," he said.

He said there is need for credit expansion in a growing economy like India. Overall, the Indian banking sector has done well, especially during the financial crisis, and he would like to congratulate them. However, they must remain prudent about the situation of NPAs.