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New Regime At RBI Will Be More Understanding Of Bad Loans Problem: Deepak Parekh

Urjit will be more understanding and sympathetic: Deepak Parekh



Deepak Parekh, chairman of HDFC Ltd., speaks during an event (Photographer: Dhiraj Singh/Bloomberg)
Deepak Parekh, chairman of HDFC Ltd., speaks during an event (Photographer: Dhiraj Singh/Bloomberg)

The new leadership at the Reserve Bank of India will be more understanding and sympathetic to the problems being faced by banks, said Deepak Parekh, chairman of HDFC Ltd. at an event organized by Bloomberg in Mumbai.

The new governor (Urjit Patel) sat on the board of SBI....He has also been on the infrastructure lending side....He has seen the problem from the other side. I wouldn’t say lenient, but I would say certainly he will be more understanding and sympathetic.
Deepak Parekh, Chairman, HDFC

Parekh said that the problem of bad loans is on the mend as the RBI and banks are being proactive in finding solutions to large stressed assets.

Bank bad loans surged to Rs 6.3 lakh crore as of June 2016 after the RBI forced an asset quality review on the sector. While this led to bad loans being recognized, resolution of these assets remains a concern.

New Regime At RBI Will Be More Understanding Of Bad Loans Problem: Deepak Parekh

When asked whether the relationship between the government and the RBI would be more cordial following the change in leadership, Parekh said he expects cordial relations between the two.

Interestingly the response to an audience poll question which asked whether the government's influence over the RBI has grown following Raghuram Rajan's exit, 80 percent of those polled said yes.

Parekh also gave a thumbs up to the government on reforms. In particular he said that changes in the dispute resolution framework which allows contractors to get 75 percent of dues, even as a final resolution to the dispute is found, has been a key reform.