The Hindu Business Line : The NPA syndrome

This is with reference to "NPAs: Why the undue anxiety?" (Business Line, July 31). NPAs are a great mental barrier for bankers. Once an account crosses safe limits, a tectonic shift happens in their attitude that prevents them from treating the account in as judicious a manner as it should be.

Wily customers, exploit the confusion and anxiety of bankers to take the account off the books, and arrive at settlements with huge gains for themselves.

Cleansing the balance sheets and adopting a conservative approach in profit-booking are part of transparency in reporting and corporate governance. Indisputably, the NPA norms prevailing now stress the importance of these areas and provide a cleaner balance-sheet.

The author's suggestion that the asset classification and provisioning norms are to be reviewed dodges the issue of transparency. The author dubs the shift in attitude of bankers as the `NPA syndrome', the symptoms of which are avoidance of NPA and scrambling to get rid of an NPA account.

P M Sibi

Mumbai

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