Banks oppose RBI committee's suggestion of higher NPA provision

.....The Reserve Bank of India had set up a working group under the chairmanship of B Mahapatra, executive director, RBI, to review the guidelines on restructured advances of banks and financial institutions. Bankers felt if regulatory forbearance was taken away, which would mean all restructured loans would have to be classified as NPAs, it would increase NPAs in the system. This would have an implication on banks’ profitability and ratings. “Banks’ ratings would be drastically affected if NPAs increase sharply. An adverse rating would make it difficult to raise funds at viable costs,” ......

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