Stating that banks have to change their credit appraisal process and policies, and should also try to come out of the problem soon, Deputy Governor K C Chakrabarty said: "NPAs are not a problem now but the process is a problem and we have initiated a lot of process (to check bad loans).
However, he was quick to add this was his personal view and not that of the RBI. The commercial banker-turned-central banker was speaking at an investor summit here.
He said the RBI is compelling banks to take suitable action on the bad asset front and at the same time suggesting them to improve their credit appraisal system.
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On inflation, he said it has peaked and will now moderate going forward "but not because of the effort by the government and RBI, it is beyond their capacity. Inflation has become chronic but anyways we cannot have 10 per cent inflation and 5 per cent growth indefinitely."
"Inflation has peaked. It is starting to come down and my own assessment is that it will start going down and may be in one-and-a-half-year down the line it will reach the target of 5.5-6 per cent."
He said part of the problem with persistently high inflation is that "we have not been able to define inflation properly. Now at least that wisdom has come into the RBI in regard to inflation target.