Q: The Mahapatra Committee on corporate debt restructuring, the working group has put out its report and one of the recommendations is that the provisioning for standard assets after they are restructured should be 5% up from the current 2% in two stages, 3.5% in the first year and 5% in the second year. What would be your reactions to this? Would it be a lot of pain?
A: It looks to be quite steep at a time when there is a lot of restructuring happening in the present economic scenario amidst the slowdown that has happened in various sectors and the policy logjam or whatever is happening. So 5% will be quite a burden when there is a lot of pressure on profits and the capability of the banker. But from the RBI's angle, they perhaps feel that the present economic slowdown and the likelihood of the account slipping into NPAs at some point of time maybe a required cushion to be built into the restructured accounts, into the asset. But we must not ........
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