FM concern over bank loan quality

Pranab Mukherjee in New Delhi on Wednesday. (PTI)

New Delhi, Sept. 7: Banks must ensure that their asset quality does not erode from the corrosive effects of high interest rates, finance minister Pranab Mukherjee said today.

A strict vigil is all the more necessary given the economy is passing through turbulent times, while the global economy struggles with the after-effects of 2008’s financial crisis, the minister said.

“The commitment to moderate levels of inflation has led to higher interest rates. In this environment, banks need to keep a strong vigil on their asset quality. These are turbulent times and we should watch every step that we take,” Mukherjee said at the 106th foundation day of the Bank of India here.

“The global economy is still trying to cope with the after-effects of the financial crisis. But this should not prevent us from taking bold and innovative steps,” he said.

On the skilled human resource crunch faced by public sector banks, Mukherjee said, the process of replacing the experienced banking professionals in the nationalised banks was challenging. The replacement process has already begun.

He said getting the right talent was one part of the problem. The other part is to inculcate the organisational culture among the new recruits so that their integration with the organisation becomes truly “seamless”.

“Banking is no longer a simple trade, it is now complex and knowledge-based. We need to constantly train our people and groom them for further leadership roles,” he said