Going forward, Reserve Bank expects that the growth in NPAs would be contained at the current levels due to a) likely improvement in GDP growth in 2013–14 and beyond; b) improvement in project implementation due to Government’s efforts in clearing the bottlenecks; and c) improved recovery efforts by banks.
Nevertheless, asset quality needs to be closely monitored and the credit appraisal and monitoring system needs to be substantially upgraded. Risk management systems also need to be improved and early warning mechanisms strengthened. Information sharing arrangements between banks needs to be made more effective.