Pranab asks banks to improve asset quality

Expressing concern over the rising non-performing assets (NPAs), finance minister Pranab Mukherjee on Friday asked banks to adopt better risk management practices and improve the quality of their assets.

"It is important for banks to constantly monitor and bring down the non-performing assets to the previous level. I am concerned about their asset quality," Mukherjee at a banking conclave organised by industry chamber Assocham.

Most banks reported increase in their non-performing assets in 2010-11. The NPAs of State Bank of India, the country's largest lender, rose to Rs.25,326 crore in 2010-11 from Rs.19,535 crore in the previous year.

Mukherjee said though Indian banks performed well during the time of crisis, their asset quality is a matter of concern.

He asked banks to adopt better risk management practices. "It is important for the banks to adopt the best risk management practices to keep themselves abreast with global developments," he said.

The finance minister said consolidation of banking services, consistently meeting the capital adequacy requirements, leveraging advanced technology, and effectively managing human resources were emerging as major areas of concern for Indian banks that need to be addressed in right earnest.

He said the government was committed to further reform financial sector. (Times of India)