Slowdown leads to greater CDR, rise in banks’ stressed assets

.....As reported earlier in Firstpost, Reserve Bank of India Deputy Governors KC Chakrabarty and Anand Sinha had met the CEOs of a dozen major banks in February to discuss their asset quality. The banks had told RBI at the time that while asset quality continued to be a concern for banks, some had been trying to focus on smaller accounts to improve quality of assets. RBI Governor Duvvuri Subbarao had said even in April that RBI had told banks to improve the risk management practices in order to detect bad loans before they went bad. The Monetary Policy unveiled by RBI in April proposed that banks put in place a robust mechanism for early detection of signs of distress and measures, including prompt restructuring in case of viable accounts wherever required, with a view to preserving the economic value of such accounts. .........

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