The consolidation of more banks may begin from next fiscal as the priority today is to unlock the jammed lending system with the Non-Performing Assets (NPAs) sitting over balance sheets of banking institutions, Banks Board Bureau chief Vinod Rai said today.
He said it has been decided to remove NPAs from banks balance sheets by this fiscal end.
Rai said the lending activity in banks has got totally jammed because of stressed assets sitting on their balance sheets.
"Capital has got locked and banks do not have enough capital to start the lending process. So our priority one today is to try to unravel or unknot the entire process where we bring about certain amount of resolution. We do one-time settlement. May be we remove some of the assets which are sitting on the balance sheets of banks," he said while addressing Chief Vigilance Officers at Central Vigilance Commission.
Rai said "what we have decided ourselves is that from today till may be December 31, or may be on the outer side by March 31, the process of removing stress from balance sheets of those banks" will end.
"We have decided to put all our energy into that process. Trying to ensure that lending process starts again because whatever banks might be doing they are not sticking out to lending for infrastructure. Unless you lend for infrastructure, the constraints for the growth of economy will always be there.
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