RBI warns against stressed assets

Tribune News Service

Mumbai, July 28

RBI Governor Raghuram Rajan on Tuesday warned against banks piling up stressed assets which are still not being categorized as non-performing assets (NPAs).

Addressing the inaugural batch of students of the Meghnad Desai Academy of Economics (MDAE), Rajan said there was enormous pressure not to tag the stressed assets as bad loans.

"On NPAs, there was enormous pressure on the RBI not to call stressed assets as NPAs. Declaring an NPA is primarily an issue of cleaning up accounting," a statement issued by MDAE quoting Rajan said.

Rajan said by refusing to categorise stressed assets as NPAs, markets were simply postponing the problem. The RBI Governor noted that categorising bad loans as NPAs were part of the operation to clean up a bank's books.

The central bank has kicked off the process of categorising all stressed assets as NPAs after they are first restructured.