While the central bank is wary of increase in debt recast by banks and has proposed stringent norms for such activities, K V Kamath, chairman of India’s largest private lender ICICI Bank Ltd, said banks’ asset quality was healthier now than what it was 10 years ago.
“The stress in restructured assets in India is very small compared to what it was earlier. Though there is lot of talk about the quality of assets, today, it is healthier than what it was 10 years ago,” Kamath said, who is also the Chairman of the country’s second largest information technology services firm Infosys Ltd.
A recent committee of RBI had suggested taking away regulatory leeway of lower provisioning given to loan recast in two years time and suggested high provisioning in the interim. Kamath also allayed concerns over capital in banks and said banks were well-capitalised and he cited the example of ICICI Bank, which has almost double the capital compared to regulatory requirement. ICICI Bank’s capital adequacy ratio is 18.5 per cent in June-end, compared to the regulatory requirement of 9 per cent.
