Little over a month after the Reserve Bank of India red-flagged banks for adopting new methods to evergreen loans and conceal stressed accounts, Finance Minister Nirmala Sitharaman on Thursday advised public sector banks to ensure fair and transparent recognition of non-performing assets (NPAs).
At a meeting to review public sector lenders’ performance in 2022-23, Ms. Sitharaman said banks should periodically review NPAs internally to ensure that there is proper recognition and reporting of the stressed assets.
While the lenders’ chiefs assured the government that their banks’ financial health was strong and were “comfortably placed to withstand any macroeconomic shock”, the Minister emphasised “adherence to the regulatory framework by focusing on risk management, and diversification of business base”, the Finance Ministry said in a statement.
“The business outlook is progressively improving in spite of the headwinds from recent global banking sector developments,” the Ministry said, adding that Ms. Sitharaman had also urged lenders to scale up their deposits and instil an efficient and optimum Asset Liability Management system.
