What it is ? Non-performing assets

Livemint:Vivina Vishwanathan:Thu, Mar 1 2012. 8:57 PM 




A majority of government-owned banks have seen a steep rise in non-performing assets (NPA) in the last couple of quarters. Let us look at what exactly NPA is and how does it affect you as a bank customer.

What is it?

For a bank, assets are loans that it gives to individuals and companies and gets regular income from it in the form of interest. When these assets stop generating regular cash flow (or become non-performing), they are known as NPAs.

How is it classified?

If a loan instalment is not paid for three months or 90 days, it is considered as an NPA. For example, if you have taken an education loan and have been unable to repay the interest or the principal amount for three months, the bank from where you have taken this loan will record it in its books as NPA. If an asset remains non-performing for a period less than or equal to 12 months, it would be classified as a sub-standard asset. These assets attract a provisioning, the money that a bank should set aside to cover potential losses, of 15%. If an asset remains in the sub-standard category for 12 months, it would be considered a doubtful asset with 25-100% provisioning. When an asset is identified uncollectable then it is a loss asset which calls for 100% provisioning.

When do NPAs rise?


To tame inflation, the Reserve Bank of India (RBI) has tightened the monetary policy 13 times since March 2010. When RBI increases its key policy rates, the banks raise lending rates or an increase loan tenor is possible. Soaring inflation and rising rates have seen the monthly budgets of many households go upside down. This has an immediate impact on the equated monthly instalments (EMIs). When many borrowers default, especially the ones with large credit dues, a bank’s profitability is hit. It needs to be noted here that a majority of NPAs for banks come from small and medium enterprises and companies.



What does it mean for you?


If you default and your loan turns into an NPA, the bank will try to recover as much as possible from you. For this, banks usually outsource recovery work to third-party debt recovery companies. Banks are also allowed to acquire assets if the borrower fails to repay. Further, non-repayment can affect your credit score and taking more loans may become a problem for you.

Chaudhuri's crown of thorns

BS :Joydeep Ghosh & Abhijit Lele / Mumbai Mar 02, 2012, 00:10 IST


Worst quarter in a decade, fund crunch, Moody's downgrade and messy NPAs... he has had little to cheer about

Unlike his predecessor, Pratip Chaudhuri speaks almost in a monotone. But that’s understandable, considering the State Bank of India (SBI) chairman has had little to crow about — and that’s not just because of the economy.

Last week’s battering of the country’s largest bank’s stock, by over eight per cent, on news reports that it was extending additional loans of Rs 1,600 crore to beleaguered Kingfisher Airlines (KFA) was just the latest example of the stress he has been going through. 

Bank officials admit to hundreds of calls from irate investors. Chaudhuri came out strongly on that day and repeatedly in the coming days that the bank was not going to provide further loans.

There have been many such instances where Chaudhuri’s firefighting abilities have been tested in his less than a year’s stint.

Even his competitors admire him for this. 

A chairman of a large sector bank hit the nail on the head: “He is not a person to make ‘big bang’ statements. He is not given to gimmicks. But in situations, which warrant strong stand like buzz to support Vijay Mallaya-controlled KFA, he has taken things head on by declaring it as an NPA (non-performing asset) in public.”

Many, on the other hand, question his public stand that the bank will not provide further loans to the ailing airline.

 “Given the political pressure, he might find it tough to continue with the same stand. In fact, he may have to eat his words,” said a chief financial officer of another public sector bank.

Full Year Ended
	Total Income	Net Profit	Net Interest Margin (%)
2006-07	44,648.31	4,541.31	-
2007-08	58,348.74	6,729.12	-
2008-09	76,482.74	9,121.23	2.93
2009-10	85,962.07	9,166.05	2.66
2010-11	97,218.96	8,264.52	3.32
Last three quarters
2011 Jun	27,731.67	1,583.55	3.62
2011 Sep	29,394.32	2,810.43	3.79
2011 Dec	29,787.37	3,263.04	4.05
Source: BSRB

But KFA is least of Chaudhuri’s problems. He has had to face many more since taking over. 

His predecessor Om Prakash Bhatt’s ‘teaser home loans’ (SBI preferred to call those special loans) had increased his home loan portfolio to over Rs 80,000 crore, but it had also earned the wrath of the regulator, the Reserve Bank of India.

So, the new chairman’s first job was to mend ties with the Mint Street. So, ‘teaser rates’ went out and lending rates were increased aggressively. 

Like a senior bank official said, “There could be difference in opinion, but you can’t be at loggerheads with the regulator all the time.”

His first-quarter results in March 2011 were a disaster — a 99 per cent drop in profits, the worst in a decade.

 Not that his predecessors had not taken any hit on their books. Both Bhatt and A K Purwar took knocks of 35 per cent and 28 per cent, respectively, on their balance sheets in their very first quarter — the argument being that SBI chairmen prefer to start with a clean slate.

But his problems were escalated by the under provisioning for employee gratuity and retirement benefits in the first three quarters. This led to a jump in the tax burden in the fourth quarter, when a big chunk of provisioning was done at one go. 

In addition, provisioning for teaser loans also had to be made. Though SBI sought to amortise this burden over time, RBI refused to let it do so. “So, we had to dip into our reserves, which caused the damage,” said a senior bank official.

Dipping into the reserves meant SBI’s Tier-I capital fell to 7.71 per cent, below the government-stipulated eight per cent. 

The infusion of Rs 8,000 crore as equity by March-end is expected to make things more comfortable.

However, experts point out even this relief may be for a short-term. Internal accruals from profits will remain under pressure against the backdrop of a huge portfolio of bad and restructured loans. 

The number of cases going into corporate debt restructuring (CDR) has been on the rise. In addition, the proposed stringent Basel-III norms for capital will make things more difficult.

According to a banking analyst, “Given that the government is under pressure on the revenue front, its limited capital infusion — the requirement was of Rs 20,000 crore to fund growth plans for the next two years — is an attempt to buy time rather than a decision based on assessment of long-term needs.”

Besides fund crunch, Chaudhuri has been facing challenges on many other fronts. 

There have been times when he has found himself on the wrong side of the finance ministry. 

For instance, when Moody's downgraded the bank, he did not criticise it. Instead, he said the ratings agency was simply just doing its job. This did not go down well with the finance ministry, which was quick to rubbish the report. It even called the agency for an explanation.

And then, there has been Kingfisher, Air India and many such high-profile cases, which have gone into CDR. 

With SBI being the lead banker in many cases, it has borne the brunt of every bad news. 

Gross NPAs have risen sharply, from Rs 25,000 crore to Rs 40,000 crore, in the last nine months.

 No wonder, the SBI stock has lost almost 33 per cent in the last one year.

Things on this front may continue to be challenging because more companies, especially in the power and infrastructure sectors, are expected to opt for restructuring. 

The standard restructured asset book already stands at Rs 37,610 crore, up by about Rs 3000 crore in the first nine months.

In Chaudhuri’s defence, he inherited a bank which was aggressive, sometimes unduly so even in the eyes of the regulator.

 Bhatt’s style of ‘making the elephant dance’ had him in the covers of magazines and newspapers. But this aggression also saw a sharp rise in gross NPAs, almost 66 per cent in the last two years of his stint, according to bank officials.

SBI, under Bhatt, wanted a global approach. As a result, aggression was important for success. Chaudhuri, perhaps, is paying for it.

While grappling with stressed assets, the bank has also reined in some of its inefficiencies. 

For example, the position of deputy general manager of branch circles had been removed in the last few years, resulting in tremendous pressure on general managers, as some zones have over 500 branches. This position has been restored.

Similarly, he has continued with his predecessor’s legacy of expanding retail business — deposits and loans. Outstanding home loans have grown by about Rs 13,000 crore to cross Rs 1 lakh crore.

The educational loan portfolio has grown by Rs 1,400 crore to Rs 12,042 crore. The auto loan portfolio has shrunk by over Rs 3,000 crore to Rs 17,409 crore. The latter is more a function of market conditions.

The numbers have improved in spite of trying conditions. That is, the share of current account and savings account (CASA) continues to be strong at 47 per cent of total deposits, an improvement of 150 basis points over the last nine months. Net interest margins have also increased from 3.32 in 2010-11 to 3.82 as on December.

Most importantly, given the fund situation, the bank has cancelled all unused credit lines and released choked-up capital. Now, only the sanctioned limit is set aside.

It’s been a tough year for Chaudhuri. Words of comfort come from the public sector bank chairman: “In the past year, Chaudhuri was engaged in balance sheet clean-up. From next financial year, he would get room to grow with focus and build his own legacy.” 

Everyone will be watching him closely.

IndusInd Bank can claim Rs.185 cr from SHCIL, says SC

Joel Rebello, joel.r@live:Livemint:: Fri, Mar 2 2012. 1:00 AM 

The ghost of the 2001 Calcutta Stock Exchange (CSE) payment crisis is threatening to burn aRs.185 crore hole in the balance sheet of Stock Holding Corp. of India Ltd (SHCIL).

A decade-old legal battle took another turn on Thursday with the Supreme Court telling SHCIL that it would hear the dispute, but wouldn’t restrain the private bank from seizing its properties if SHCIL does not pay up by 6 March. SHCIL moved the Supreme Court seeking a stay on a Calcutta high court order that directed SHCIL and a stockbroker to pay up.

Founded jointly by financial institutions such as the erstwhile Unit Trust of India, Industrial Development Bank of India Ltd (now IDBI Bank Ltd), Life Insurance Corp. of India and General Insurance Corp. of India, SHCIL used to offer custodial services to stock market investors. In the early 2000s, its key clients were large stockbrokers.

SHCIL has been facing a claim of around Rs.185 crore from IndusInd Bank Ltd for dishonouring three cheques that the custodian had issued in early 2001 to stockbroker Harish Biyani. The bank discounted the cheques issued to Biyani—one of the key accused in the 2001 payment crisis at CSE—but SHCIL eventually didn’t honour them.

Failing to recover the Rs.24.4 crore it paid to Biyani discounting the post-dated cheques, IndusInd Bank moved the Debt Recovery Tribunal (DRT) in Kolkata in 2001 seeking attachment of SHCIL’s properties and investments, along with those of Biyani.

The bank’s claim, which over the years has swelled to Rs.185 crore with interest, was upheld by the Debt Recovery Appellate Tribunal and the Calcutta high court. Initially, though, the DRT had ruled against the bank.

Late last year, the Calcutta high court ordered SHCIL and Biyani to pay up by 6 March; if they couldn’t, IndusInd Bank was allowed to attach their properties and investments.

SHCIL moved the Supreme Court seeking a stay on the Calcutta high court order, but the apex court didn’t oblige—it said on Thursday that it would hear the dispute, but wouldn’t restrain the bank from attaching properties if Biyani and SHCIL didn’t pay up by 6 March.

“I will fight this case till I die,” said Ashok Motwani, SHCIL’s managing director and chief executive officer. “This is certainly not the end of the dispute.”

Meanwhile, IndusInd Bank expects SHCIL to pay up, according to a key official, who did not want to be named. “Our aim is to only recover what they (SHCIL and Biyani) owe us,” said this bank official. “SHCIL is a large organization and I don’t think it will force us to attach its properties.”

IndusInd Bank has fully provided for the loss on account of discounting of cheques and whatever it recovers from SHCIL and Biyani will be written back to its profits. The amount it has claimed is quite substantial—it is almost as much as its quarterly profit. Its net profit in the quarter to December wasRs.206 crore.

For SHCIL, the financial implications of the dispute are bigger. In fiscal 2011, its net profit was at Rs.64 crore, down from Rs.284 crore in the previous year. In 2009-10, SHCIL’s profit was higher because of one-off income amounting toRs.295 crore from the sale of a part of its stake in the National Stock Exchange.

IndusInd Bank holds SHCIL and Biyani “jointly and severally” responsible to pay Rs.185 crore, but “it is most likely” that it will train its guns on SHCIL for recovery.

“For Biyani, the 2001 payment crisis was a huge setback,” said a former CSE official, who did not want to be identified. “I don’t think IndusInd Bank expects to recover much from him.”

Biyani wasn’t immediately available for comment.

Biyani used the money drawn from IndusInd Bank to pare his “exposure”, for financial liability, with SHCIL, according to the former CSE official, who was among those who had investigated the crisis for the exchange.

In those days, SHCIL used to make cash advances to stockbrokers under various schemes—it used to offer variants of so-called payday loans that are small, short-term loans extended against the borrower’s next earnings.

IndusInd had initially refused to discount the three cheques that Biyani presented, but did so after SHCIL issued a letter saying that it wouldn’t in any event dishonour the cheques, this person added.

SHCIL, however, later said that the three cheques were issued under a cash on payout scheme and it was made clear to the bank that it wouldn’t honour them if Biyani didn’t receive money from CSE.

The exchange expunged Biyani’s trades in shares of DSQ Industries Ltd, describing them as collusive and intended to artificially shore up the price of the stock. He didn’t receive any money at the end of the settlement cycle for the shares of DSQ Industries which he had sold. This, SHCIL alleges, forced it to dishonour the cheques.

M/s.Vijaya Durga Auto & ors V/S City Union Bank ltd

A.IR:777/2010

IA 1360/10 (delay) :Ld. Counsel Shri K.A. Ramakrishnan appearing on behalf of the petitioners drew the attention of this Tribunal to the affidavit filed in support of the petition more particularly to paragraph 5 of the affidavit and stated that the reasons have been properly explained in the said paragraph and that it was only due to non furnishing of the copy of the order by the DRT, Vishakapatnam and due to the advocate of the petitioners becoming sick the petitioners could not file the appeal in time.  Ld. Counsel prayed that the delay of 419 days in filing this appeal may be condoned.

Ld. Counsel Shri R. Balachander appearing on behalf of the respondent bank stated that it can been seen that the petitioners’ counsel was aware of the final order being passed on 1.5.2009 and that the said counsel did not inform the passing of the final order to the petitioners.  

Ld. Counsel stated that it can further been seen that the petitioners had only enquired with his counsel after more than a year had elapsed and that this alone reflects that the petitioners were not in any way pursuing their case.  Ld. Counsel also stated that the delay has not at all been explained and that the petitioners blaming their counsel for not informing them and blaming  also the DRT, Vishakapatnam for not giving a copy of the final order and further stating that the very same counsel whom the petitioners are blaming became sick and could not travel to Chennai because of his sickness cannot be reasons for condoning the delay.  Ld. Counsel added that law requires each and every day of the delay to be explained and that in this case it can be seen that not even a single day of the 419 days of delay has been explained by the petitioners and prayed that this IA may be dismissed.

Heard the Ld. Counsel for the petitioners and the respondent bank.

It is seen that the petitioners firstly have blamed their counsel that he has failed to inform about the disposal of the case by the DRT, Vishakapatnam and secondly that the petitioners have blamed the DRT, Vishakapatnam for not furnishing a copy of the final order and thirdly that the petitioners have stated that the same counsel has become sick and could not travel to Chennai to file the appeal in time.  It is well established law that the delay attributed to the inaction on the part of the advocate can never be a reason for the condonation of delay.  

Further it can be seen that the petitioners have never cared to enquire about the status of their case for more than a year and when the petitioners themselves have not taken adequate steps to know the status of their case it can easily been said that the delay caused by their keeping quiet cannot be a reason for the condonation of delay.  

Therefore in view of the above it can be seen that the petitioners have not established that they were prevented by sufficient cause from filing the appeal within the period of limitation and have also not explained the delay of 419 days that had occurred thereafter in filing the appeal.

Therefore this Tribunal is driven to conclude that the petitioners have not made out a  case for the condonation of 419 days delay and further driven to conclude that the petition is liable to be dismissed.  

Accordingly the petition is dismissed.

This judgement was delivered by the Honble chairperson of DRAT Chennai on 1st March 2012

People Who Made Millions After Quitting Their Job

SiliconIndia   |   Monday, 27 February 2012, 16:54 IST

Bangalore: The world has changed the people’s way of thinking as they are finding their own ways of getting richer day by day by quitting their jobs. So, do you want to be one among them? 

If yes, then the 1^st reason for you to quit your present job may be because you must be bored of serving for others and then you must have made up your mind to get richer by yourself by your own hard work. But there’s one thing you must keep in mind, i.e., you must be lucky enough to get the chance of becoming rich along with your hard work.

 So, if you are in any plans of making millions by building up your own career, here are few millionaires from whom you can get inspired as they have turned their dreams of becoming rich into reality by their own hard work as reported by Michelle Fox on Yahoo Finance Website.

1. Rick Wetzel and Bill Phelps, Wetzel’s Pretzels

These two guys were working for the Nestle when they got an idea of starting Wetzel’s Pretzels. The idea was 1^st suggested by Wetzel’s wife to start soft pretzels [snacks] to sell at the mall. To start this business Wetzel sold his Harley Davidson to raise their funds to start it during their leisure times. When all the recipes were created at Phelps’ kitchen these two guys persuaded a mall landlord by giving him to taste their recipe. Later as the land lord liked their food’s taste, he rented Wetzel’s Pretzels its first store. 

Their lucky charm started to work after a year later of their business when they were offered a partition package by Nestle. With that separation by the Nestle they opened up several more stores before decoding to franchise in 1996. At present, there are about 250 stores United States and they have plans of opening their stores in Japan and India this year.

2. Shep and Ian Murray, Vineyard Vines

 

These brothers were dejected sitting behind desks at their corporate jobs in Manhattan. Shep resigned from his job as an advertising account executive in the year 1998 and on the same day his brother Ian resigned from his job. 

After quitting their jobs they started the Vineyard Vines which was a tie company based on Martha’s Vineyard. They started selling their product at beaches, boats and in bars and with that they were able to sell 800 ties within the first week of their business.

 With that at present they are having around 18 freestanding Vineyard Vine retail stores across the U.S., and their product can be found in about 500 stores at present. The company projected about $100 million in sales for 2011.

3. Terry Finley, West Point Thoroughbreds

When Terry was completing his military service in the year 1990, he along with his wife Debbie, bought a horse worth $5,000. Terry got addicted to horse racing when his horse Sunbelt won its 1^st race. 

This 1 win was enough for him to quit his insurance job. After he quit that job, he concentrated more on his passion and by that enthusiasm he started West Point Thoroughbreds with his better half [wife]. 

At present, this West Point Thoroughbreds buys 20 to 25 horses every year and since 2007 its horses have won more than 20 percent of their races. The annual sale of that West Point Thoroughbreds is nearing $7 million.

4. Rakesh Rocky Patel, Rocky Patel Cigars

Rocky Patel is the Indian born American, who was originally a Hollywood lawyer and he had represented several movie stars including Arnold Schwarenegger and Gene Hackman.

 It was at that time when he got exposed to smoking cigars while spending time with the actors. He was the one who introduced Indian tobacco blend in the mid 1990s and he had almost sacrificed 15 long years of his life to start this business. 

Even though his friends and colleagues warned him to leave such a profitable practice for an industry he didn’t know, he saw an opportunity to create a product he thought which was missing in the market. 

His business took a good turn with the first big success that came in the year 2003 with ‘The Rocky Vintage Series,” which earned him high ratings and tributes. 

His cigar company now produces 20,000,000 cigars annually and in 2011 it had sales in excess of $40 million.

5. Kim and Beaver Raymond, Marshmallow, Fun Company

Kim and Beaver quit their jobs when their dream home made toy for their son became a big hit surprisingly. 

They both were working in the fashion industry in 2002, when they made marshmallow “shooters” out of PVC pipe to their son’s birthday party. 

With this success, the couple along with some of their friends figured out how to construct and market a new toy marshmallow shooter and at this time the Marshmallow Company took its birth.

 The company sold more than $7million worth of shooters in the year 2010.

What Mallya's PROs should have told him

BS :Malavika Sangghvi / Mumbai Feb 25, 2012, 00:20 IST

I wonder how much of Vijay Mallya’s troubles have to do with his public image. Perceived hedonists make pretty soft targets when the chips are down. Don’t believe me? Ask Dominique Strauss-Kahn who is a copybook case for the adage “give a dog a bad name and hang it”. Today, anything that is sleazy and of a sexually perverse nature can be attached to DSK’s name by his political rivals — regardless of whether it’s true or not.

It’s a funny business, this thing of public image and in India, it is a gravely misunderstood one. After all my years in the media, my advice to people who want to create a public profile for themselves or their companies is to first strategise what they want to communicate and why — before they venture into the public domain. Because contrary to what PR agencies and personnel tell you, PR is not about getting your mugshot or your company name in the papers, but involves far more nuanced thinking.

There was a time when the best corporate PR emanated from Bombay House. This was in the days when the Tatas paid their PROS to keep them out of the press, not in it. I call it the “BN” (Before Niira) days. Yes, before she came on the scene, the group had a fuddy duddy, slightly inaccessible and aloof image — but it worked well for it and what’s more, it was true to its intrinsic nature. Radia came in and changed all that in a frenzy of activity. Suddenly Ratan Tata became accessible and familiar, issuing statements, offering opinions and giving interviews.

And we all know what familiarity does. Which brings me back to Mallya and his current crisis. For years, we have been watching Mallya live out his Richard Branson-fixation. But that’s where nuanced PR comes into play. While it’s all very well to fashion your style on Branson’s perceived flamboyance, Mallya’s spin doctors ought to have told him that Branson’s swashbuckling public image was anchored in a very wholesome, appealing and statesman-like persona that worked in tandem with his flamboyance. Branson associated himself with world leaders like Nelson Mandela and Desmond Tutu in their search for solutions to global conflicts. He established the Branson School of Entrepreneurship in South Africa to improve economic growth and hosted a high-powered environmental gathering at his private island to discuss global warming. His support of African nations was not lip service. He established schools in Kenya and sat in a hunger strike in protest of the Sudanese government’s expulsion of aid groups from the Darfur region. He was a champion of Global Zero, a non-profit international campaign for the elimination of all nuclear weapons worldwide.

Even in his businesses, he is associated with many cutting-edge science and technological enterprises like space travel and the setting up of umbilical cord banks and the search for alternative green fuels. And his sporting image comes not from owning race horses or motor racing or cricket teams, but from daredevil and personally challenging extreme sports that showcase his courage and fearlessness through his attempts to break world records in ballooning, sailing, swimming and golfing.

And for those happy to call Mallya a desi Branson, it should be pointed out that unlike Mallya, Branson’s public image is of a perennially fit, lean, mean and tanned tycoon. Public image. There’s so much more to it than meets the eye.

Bankers for guidelines on restructured assets

BS Reporter / Mumbai Mar 01, 2012, 00:09 IST

Indian banks have asked the Reserve Bank of India (RBI) to announce proper guidelines on the classification of restructured assets, particularly for cases in which repayments are regular, under the revised schedule.

RBI deputy governor K C Chakrabarty on Wednesday met top bankers in Mumbai and discussed the rising non-performing assets (NPAs) in the system. Stress in sectors like textile, steel, mining and aviation was also discussed, bankers said.

 In the meeting, lenders said if restructured assets continued to perform well, according to the restructured schedule for a certain period of time, these should be taken off the restructured book and upgraded into standard assets. This would reduce the provisioning burden on banks.

Pratip Chaudhuri, chairman, State Bank of India, said, "We said according to our definition of NPAs (non-performing assets), the restructuring definition should have a timeline. If an account adheres to the revised schedule for two years, so that there is definite proof it is performing, it should be taken out of the categorisation of the restructured account." Currently, there was no definite timeline on the upgradation of a restructured asset, he added.


"Today, there is a lot of mystery about what is restructured. Everything restructured is seen as equivalent to an NPA. Restructured means the dues are not being paid according to the schedule, not according to the revised schedule. But the ultimate recovery of the debt is not in doubt. The probation period and when it needs to exit restructuring need to be more clearly defined," he said, replying to queries after the meeting.


M Narendra, chairman, Indian Overseas Bank, said, "This was a general review. It was also aimed at finding out what the sector-wise issues are. The NPA situation is very much manageable and under control. Sectors like textile and aviation did get a special mention from the regulator."
Of late, most banks have been plagued with mounting restructured assets, which has led to higher provisioning in stressed sectors. Rising interest rates and the slowdown in the economy are seen as major reasons behind this.
Sectors like aviation, textile, infrastructure, iron and steel and telecom have been the worst hit.


Loans worth Rs 50,250 crore were referred for corporate debt restructuring (CDR) during the April-December period of the current financial year. Currently, total outstanding loans referred for restructuring are worth Rs 1.43 lakh crore, according to CDR forum data. With a share of 26.8 per cent, the iron and steel sector accounts for most of these, followed by infrastructure (12 per cent) and textiles (eight per cent).

Reserve Bank asks banks to focus on recoveries of non-performing assets

NDTV, 01 Mar 2012 | 10:55 AM

The Reserve Bank of India has asked Indian banks to focus on recoveries, bankers said after a Wednesday meeting with the central bank.

However, the consensus was that non-performing assets are at manageable levels, bankers said after the meeting which also covered implications of Basel-III norms on NPA recognition.

No individual NPA accounts were discussed, bankers said, but aviation, textile and steel sectors were part of the dialogue. Earlier, there had been speculation that the matter of Kingfisher Airlines would be brought up at the meeting.

Bankers also suggested that restructuring should be extended to smaller accounts instead of just large-ticket size accounts, said Pratip Chaudhuri, chairman of India’s largest lender State Bank of India.

Chaudhuri said that an account should exit restructuring classification after one year, and that a restructured loan should not remain classified as such for its lifetime.

Other bankers have proposed a timeline of two years to exclude an account from restructured classification

He added that banks had asked for proper guidelines on classification of restructured loans, and that the definition should include timeline, clear guideline when account has exited restructured classification.

If a restructured loan adheres to revised repayment schedule, it should be out of restructured classification, he said.

The central bank, however, may not sector-specific NPA dispensation due to a need to comply with global standards.

There were no concerns about understatement of NPAs.

Banks, however, will continue to recognise NPV loss upfront

The meeting was attended by top representatives of public and private sector banks, among them SBI, ICIC Bank, Axis Bank, Punjab National Bank, Andhra Bank, Bank of Baroda, Union Bank, Bank of India, and Indian Overseas Bank.