Bad loan issues worrying, says RBI chief
GN Bureau | May 15, 2015
To combat ever increasing issues relating to cyber crime the Reserve Bank of India (RBI) is likely to set up an information technology wing.
"We've to worry about increasing issues.. about cyber-security, we've to worry about cyber supervision and with that in mind, the board suggested that we focus on an IT subsidiary which would help us develop policies as well as capabilities in the areas of IT," Governor Raghuram Rajan said in Benaulim, Goa.
The cyber security was discussed at the central board meeting of the monetary authority in Goa, which was attended by the governor.
Rajan said the central board talked about the changing nature of information technology and the need for monetary authority to keep abreast of it.
"The changes are so rapid that one of the directors said today we have banking which uses IT today, tomorrow it's going to become an IT company which does banking," he said.
It will focus on issues concerning systems such as cyber-security, supervising the nature of technical capabilities of our banks, the new payment banks which are going to be IT-intensive as well as the small finance banks.
Meanwhile , raising concern over rising bad loans at some banks, Rajan said there was no danger of any financial crisis but it may be early to declare that the worst was over on the NPA front.
"I would not be prepared to make that statement today only because you see a variety of problems across banks. Some banks have managed to bring down their bad loan positions, for others it is still increasing," Rajan said.
He was replying to a query on whether the worst was over with regard to Non-Performing Assets (NPAs) in the banking system.
"I would be more confident when there will be a uniform sort of series of results across the banks," Rajan told reporters after a central board meeting of the RBI here.
He, however, sought to undermine the concerns, saying, "if the question is whether are we in the danger of a financial crisis? The answer is no!"
He further said that he is more worried about the losses to taxpayers and the effects on banks' functioning due to their rising bad loan levels.
A recent International Monetary Fund report said the domestic banking sector was in trouble with a whopping 36.9% of the country's total debt being at risk, which is among the highest in emerging economies.
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