Asserting that the non-performing assets in the banks have been contained, bankers on Tuesday said that they were monitoring it on a constant basis since the RBI's new definition on bad loans comes into effect from March 31, 2004, which according to some might spurt net NPAs by three per cent in 2004-05.
"Banks are continuously monitoring the (bad) accounts as the RBI's new asset classification comes into effect from March 31, 2004," IBA chairman Dalbir Singh said at a seminar organised by the PHD Chamber of Commerce and Industry, in New Delhi.
With a view to move towards the international best practices and to ensure greater transparency, the RBI had advised the commercial banks and urban cooperative banks to adopt 90 days norm for recognition of loan impairment from the year ending March 31, 2004.
Singh said all the banks were ready for the RBI's new format and they had even made advance provisions in this regard.
The NPAs were in control and most of the public sector banks had net NPAs of 4.0-4.5 per cent of net advances, Singh said, adding, "NPAs are not galloping as it used to be in the past and many banks had a coverage ratio of as high as 85 per cent.
He said in some banks the coverage ratio, which shows the extent of provisioning for the bad assets, could go up to 100 per cent.
Earlier top bank officials had told PTI that net NPA was likely to be 8.5-10 per cent once the change in definition of classification of bad loans becomes effective.
Apprehending higher provisioning for NPAs and a lower net profit, they said there was a need for change in the strategy to tackle this problem.
