Bad loans in the banking system may have peaked and the situation relating to non-performing assets (NPAs) is likely to improve from now on, according the Reserve Bank of India (RBI).
“Given the current situation... looks like there would not be undue alarm in the near future. So, assuming that things do not deteriorate in a very significant way, the NPAs might have peaked or the asset quality might have bottomed out,” said Anand Sinha, deputy governor, RBI in an event organised by industry chamber ASSOCHAM. “The expectation is that from here on the asset quality should improve,” said Sinha.
The central bank is planning to set up a working group committee to introduce more long-term fixed interest rate loan products by banks. He said the central bank is also planning to set up a committee to look into the issue of facilitating the development of fixed rate loan products in the banking system.
“A variety of fixed interest rate loan products are imperative considering that currently the banks offer fixed rates on deposits and mostly floating rates on home loans, which exposes borrowers to uncertain rate movements,” said Sinha.