PUNE, JAN 27: The RBI deputy governor, S P Talwar, today criticised domestic and international analysts for harping on the level of non performing assets (NPAs) in the Indian banking sector. "These agencies have chosen to ignore the high level of NPAs which have totally eroded the banking systems in East Asian countries with many banking institutions folding up as a consequence," Talwar, said.According to Talwar, the efforts of the RBI in strengthening the prudential regulations and supervision system had helped in sustaining the health of Indian banking system enabling it to withstand the contagion effect of the East Asian syndrome.Talwar said that there was a lot of pressure to reduce the asset clarification norm to one quarter in respect of past due loans. "We have taken the view that international practices should not be merely mimicked but should be carefully evaluated and applied to a country's specific situation keeping in view the support systems," he said.In countries like India, the tradeand commerce cycle combined with payment settlement systems extends beyond a quarter. Unless the underlying commercial and payment systems move towards faster settlement of trade transactions, we do not see any immediate compulsion to shift to a norm for asset classification one quarter in respect of past dues, he said.Commenting upon to the Y2K problem which is being pursued by the RBI more as a business risk than a technology problem, Talwar said a target date of December 1998 was fixed for ensuring Y2K compliance and the banks may be subject to penal measures in case of persistant non-compliance beyond March 1999, he said. A high powered Working Group in RBI under the chairmanship of the deputy governor will review the progress made in compliance at regular intervals.
