S&P praises RBI norms on NPA sale

Mumbai: Standard & Poor's Ratings Services on Wednesday said that Reserve Bank of India's (RBI) draft guidelines on the sale and purchase of non-performing assets (NPAs) by banks, issued on Tuesday, is a move in the right direction toward better enforcement of the quality of assets in the banking sector.

The proposed guidelines also highlight the continued vigilance of RBI in its supervisory activities. Although the draft guidelines have yet to be finalised they aim to improve quality and disclosure of banks' reported assets, according to S&P.

This will be achieved through allowing the sale or transfers of NPAs to be conducted on a clean basis, without any form of recourse to the selling bank.