RBI adopts 'moral approach' to maintain monetary control

Posted By: Religare
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RBI adopts 'moral approach' to maintain monetary control
RBI Governor, D Subbarao, who is well known for his cautious policies and words, will be using a moral approach to control monetary situations in the Indian economy.

As per media reports, Reserve Bank of India (RBI) officials including Subbarao will meet banks at the end of this month to discuss bad loan situations in the country.

Bad loans for Indian banks are coming up like frogs after first rains. The gross non-performing assets of the Indian banking sector crossed Rs 1 trillion mark at the end of September 2011 and have increased even faster since then.

The largest public sector lender, State Bank of India accounts for almost 32% of total gross NPAs amongst public sector banks. And the journey continues with assets like Kingfisher Airlines turning bad too.

Now since interest rates are high and investments are slowing, RBI has been cautioning banks to go slow in lending to such sectors that are highly inclined towards uncertainty.

Again, showing a moral approach, RBI recently told banks that it had no issues with lending to Kingfisher Airlines, as long as they think it was recoverable.

Read more about: rbi, banks, sbi
Story first published: Friday, February 24, 2012, 23:30 [IST]
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