Sunday, 4 November 2012

Reducing EMIs will push up NPA & not Growth

This has reference to the meeting the Finance Minister P.Chidambarm has with the Chiefs of Public Sector Banks.He is reported to have advised the Banks to reduce EMIs to kick start growth.In his own words"The middle class is complaining about increase in EMIs and stretching payment cycle.The middle class which consumes consumer durables, is postponing purchases, and that is not good for the industry." Is Mr.Chidambaram is industry Minister or Finance Minister? He also says that the Gross NPA ratio in Banks increased to 2.9% from 2.4% from the previous year.Net NPA ratio increased from 0.9% to 1.03%.Still he says that the health of the Banking industry in our country is healthy.The figures in abosulte term is quite staggering and unless corrective steps are taken to prevent increase in NPAs and suggest stringent recovery steps to reduce the NPAs, the day is not far off form Indian Banks too following the European way. As an owner he has shown no concern over increasing NPAs and still advising the banks to lend more which will kill the banking industry in particular and India's economy in general.