RBI has to ensure NPAs are not swept under the carpet: Deepak Parekh

RBI has to ensure NPAs are not swept under the carpet: Deepak Parekh: Interview with Deepak Parekh, chairman, HDFC...

Clear perceptions
 This refers to the excerpts from BS interview with Deepak Parekh captioned ‘RBI has to ensure NPAs are not swept under the carpet’ (Business Standard, Q&A, May 16). The brief answers from the veteran banker, to the pertinent questions raised by Joydeep Ghosh should set at rest the apprehensions raised by economists and the analysts in the media about the purport of the latest Ordinance amending the B R Act and the role of RBI in the resolution of NPA crisis.
Post-Ordinance debates strayed away from the main issue of managing stressed assets of the banking system and were sometimes judgmental   about the modalities to be followed and the role of GOI and RBI in supporting the banks to get out of a crisis created by policies which compromised prudent principles for political and administrative expediency.
Deepak Pareekh has done a service to the future of the Indian Financial System by making the following observations:
a)     ‘It is a pointless debate over whether banks are giving up their autonomy or whether the RBI or the government will be micro-managing the situation….it is the job of the regulator to ensure stability in the system.’
b)    ‘With the benefit of hindsight, it (RBI being aggressive on the asset quality review) was the right decision as the AQR brought out the extent of toxic assets in the system. Where the central bank needs to firmly stand its ground is putting an end to the practice of sweeping NPAs under carpet. This, above all, is an issue of governance.’
These days, sane advice on policy, which are not guided by constituency interests, is a rarity.  This interview proves that there is still scope for hope and there will be appreciation from those who understand things, if policy makers and regulators move in the right direction.
M G Warrier, Thiruvananthapuram

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