MUMBAI: Reserve Bank Governor Urjit Patel on Saturday called for recapitalisation of state-run banks to help them resolve the NPAs issue in a time-bound manner as bad loans at 9.6 per cent of the system is not acceptable. "Gross NPA ratio of the banking system at 9.6 per cent and stressed advances ratio at 12 per cent as of March 2017 on the back of persistently high ratio in the past few years, is indeed a matter of concern," Patel told a gathering of bankers and industrialists in the presence of finance minister Arun Jaitley Admitting that the balance sheet of most state-run banks are not healthy enough to take large haircuts, which is a corollary of any bad loan resolution, he called for their recapitalisation. "NPA resolution would necessitate a higher re- capitalisation of these banks," he said, adding "Government and the RBI are in dialogue to prepare a set of measures to enable state-run banks to shore up the requisite capital in a time bound manner. "Regulatory or rather the economic challenge in dealing with the NPA issue gets accentuated when seen against the capital position of some of the banks, particularly public sector banks, he told an insolvency summit, hosted by industry lobby CII and chaired by Jaitley.The RBI chief said as much as 86.5 per cent of GNPAs are accounted by large borrowers. "It is clear that state-run banks will need to take haircuts on current exposures under any resolution plan agreed within or outside the IBC .

Source: Times of India August 19, 2017 07:42 UTC