India’s banking sector is ready and fit to support the country’s growth in the coming years, K V Kamath, Chairman of the National Bank for Financing Infrastructure & Development, said in an interview with ANI.
Kamath said that after the government took steps to minimize the non-performing assets (NPAs) in India, the banking sector has come out of the twin balance sheet problem and is now ready to support the nation’s economic growth.
The issue of NPAs has been a significant problem for banks for a long time. However, the government and RBI, through the Insolvency and Bankruptcy Code of 2016, have reduced the number of NPAs in India.
Earlier, Indian banks were suffering from a twin balance sheet problem, where the banks’ balance sheets were affected by rising bad loans, and the corporate balance sheets were impacted by non-payment of dues and increasing loans.
Public sector banks in India are performing better than their private sector counterparts in terms of NPAs, according to a survey conducted by the industry body FICCI and the Indian Banks’ Association (IBA).
The survey found that a majority (77 percent) of the respondent banks reported a decrease in NPA levels in the last six months. All responding public sector banks cited a reduction in NPA levels, while 67 percent of participating private sector banks reported a decrease.
None of the respondent public sector banks and foreign banks stated an increase in their NPA levels over the last six months, while 22 percent of private banks reported an increase.
Among the sectors that continue to show high levels of NPAs, most of the participating bankers identified sectors such as food processing, textiles, and infrastructure.
Kamath said that the manufacturing sector will flourish if the country continues its economic growth at a rate of more than 7 percent annually.
“I look at all that has been done, the clean balance sheets, the opportunities before them, the growth that we see, the Indian economy should do extremely well.”, he said.
(Inputs from ANI)