New Delhi Nov 3 (IANS) The Reserve Bank of India s (RBI) move to direct banks to take the major debt defaulters through the route of insolvency in order to tackle non-performing assets (NPAs) was principally "not correct" former RBI Governor Y.V. Reddy said on Friday.
"It is essentially a problem of the public sector banks which are owned by the sovereign. In a way asking RBI to take the initiative in solving the problem (of NPAs) is extraordinary " Reddy said here at the 20th JRD Tata Memorial Lecture organised by the Associated Chambers of Commerce and Industry of India (Assocham).
"In principle I agree it is not correct. I didn t say it is not the best option. But the regulator s measure is special."
Reddy said banking was a business where one needed to take risks. "Essentially it is a macroeconomic banking and public sector problem.
"If it (NPAs) is fixed quickly the better " he added.
Reddy also said that if there was a difference in the public and private sector banks performance then it should be attributed to its governance.
"Overall the problem in public sector banking is a structural problem " he added.
--IANS
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