National
Slowdown of credit pre-dates banks drive against NPAs: Rajan
New Delhi, Sep 3 (IANS) The slowdown of credit growth in India is not the fallout of state-run banks attempting to resolve their massive non-performing assets (NPAs), or bad loans, problems and pre-dates the recent efforts by banks to clean up their balance sheets, former RBI Governor Raghuram Rajan has said.
“Once again there were a bunch of critics who claimed that cleaning up the bad loan problem was what led to the slowing of credit by the public sector banks,” Rajan writes in his forthcoming book “I Do What I Do: On Reforms, Rhetoric and Resolve” that is due to be released next week.
“In a speech in June 2016 in Bengaluru, I made the case for the clean-up once again by asking these critics to actually look at data, which showed the slowdown started before the clean-up, probably as banks became aware of the magnitude of the problem,” he said.
Rajan describes how the Reserve Bank of India’s (RBI) repeated attempts to seek a resolution of stressed assets issue met with tepid response from bankers.
“As we found banks reluctant to recognize problems, we decided not just to end forbearance but also to force them to clean up their balance sheets. The Asset Quality Review, initiated in 2015, was the first major exercise of this nature in India,” he writes.
Subdued inflation and demand prompted the RBI last month to reduce its key lending rate, for the first time since October 2016, by 25 basis points to 6 per cent, which, however, failed to lift business sentiments.
“Addressing the twin balance sheet problem remains the RBI’s top priority,” the central bank said while announcing its monetary policy review, referring to the financial stress faced by banks and companies.
Experts feel that private investments won’t go up on account of an interest rate cut because the cost of credit is not the main reason for investments not happening in India. Weak credit growth and low private investment has been an ongoing problem for some time now.
A study by industry lobby Assocham said private investments are unlikely to pick up before 2019 owing to low capacity utilisation and weak balance sheets.
Corporate India is currently heavily overleveraged as a result of flush of investments made in the boom period preceeding the global economic slowdown caused by the 2008-09US financial crisis. As India escaped the worst of the financial crisis, the flurry of investments continued. The loans taken by the private sector account for a substantial part of the massive NPAs accumulated by state-run banks.
NPAs have risen to over Rs 9 lakh crore and by the Banking Regulation (Amendment) Bill passed by Parliament last month, the RBI has been given power to refer these cases to the Insolvency and Bankruptcy Board.
The new law also has provisions empowering the RBI to issue directions to banks for resolution of stressed assets.
The sectors most responsible for the accumulated NPAs are steel, power, textiles and infrastructure as RBI has identified 12 large loan defaulters who account for 25 per cent of the total NPAs. Action has already begun under the Insolvency and Bankruptcy Code against some of these defaulters, including Essar Steel, Bhushan Steel and Bhushan Power.
–IANS
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Lucknow: Vishal Singh, a renowned social worker from Lucknow, also known as Foodman, has once again made India proud. He was honored by the Happy Hands Gloves Cooperative Limited Company in Korathai, Thailand, for his work with the Hunger Free World Mission.
The Hunger Free World Mission’s meeting was held in Korathai, Thailand, under Vishal Singh’s leadership. Representatives from several countries, including Mr. Raja Dwivedi (Managing Director of Happy Hands Gloves Limited), Thailand Coordinator Mr. Raja Mishra, and member Mr. Varun Singh, attended the event.
Under Vishal Singh’s leadership, the attendees took a pledge to work together toward creating a hunger-free world.
Speaking on the occasion, Vishal Singh explained that the main goal of the Hunger Free World Mission is social participation. He said the mission is not just about feeding people but also about meeting other basic needs of those who are struggling. The mission focuses on helping families of terminally ill patients in hospitals by providing food and shelter. It also works to fulfill essential needs like education, jobs, and care for the elderly.
For the last 16 years, the Vijay Sri Foundation has been providing free services, benefiting thousands of people. Vishal Singh highlighted that the mission aims to gain global recognition like other organizations such as WHO, WWF, and Red Cross, which work for social causes.
During this meeting, Vishal Singh was appointed as the Chairman of the Hunger Free World Mission by representatives from various countries. They also discussed holding regular meetings in different countries to push the mission forward.
Business tycoon Dr. Abhishek Verma has also supported this humanitarian mission, vowing to promote the idea of “Seva Parmo Dharma” (Service is the highest duty) worldwide. Vishal Singh praised him, stating that people like Dr .Abhishek Verma inspire others to work for the betterment of society.
Recently, Romania’s Ambassador, Mr . Daniela Sezonov Ţane, invited Vishal Singh to the Romanian Embassy in Delhi, where they discussed the mission in detail. Impressed by his humanitarian work, she honored Vishal Singh and invited him to Romania to take the mission forward .
Food man Vishal Singh has been serving the people of India for the past 16 years. Through the Vijay Sri Foundation, he provides free meals to cancer patients & their families ,shelter, and education for women & children along with running free old-age homes in Lucknow.
In addition to his humanitarian work, Vishal Singh also addresses issues like crime and corruption through his role as Chairman of Seva Path Media and Managing Director of Vijay Sri Foundation.
During the COVID-19 pandemic, Vishal Singh and his team worked tirelessly to provide food and help to the needy, including starving children, elderly citizens, and pregnant women. Despite contracting the virus himself, he continued to assist others after his recovery. He even created a life-saving oxygen regulator using household items, which was praised by doctors both in India and abroad.
In his address at the meeting, Vishal Singh spoke about his mission to create a hunger-free world. He pointed out that India’s large population, along with issues like unemployment and poverty, has caused the country to fall on the Hunger Index. He urged people to contribute just one handful of grains daily to help create a hunger-free world.
He concluded by saying that through social participation, we can empower the people around us, meet their basic needs, and work together to build a stronger, more prosperous, and developed society.
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