Reserve Bank's recent review of top defaulters has revealed that the asset quality problem is largely due to governance issues at state-run banks as well as borrowers and the Government cannot be blamed for the mess, Deputy Governor SS Mundra said on Thursday.
“One thing has come out quite clearly, that the issues that we are seeing have not much to do with the ownership of the banks. It is more a governance issue than an ownership issue,” Mudra said at a banking conference organised by industry lobby CII. While there are external factors which have affected asset quality, internal ones are also as important and ‘governance deficit’ is a big issue, he said, adding bank boards need to put in place risk management practices as per their appetite.
The comments come amidst rising criticism by ex-public sector bankers and Government officials following a series of reports saying that between 2012-13 and 2014-15, 27 public sector banks have written off loans worth a whopping Rs1.14 trillion.