P Bhatt, chairman, State Bank of India, today said bank
non-performing assets (NPAs) in the country had begun
to rise, with the highest defaults being reported in the
real estate sector. Bhatt warned that NPAs were expected
to spill into other sectors as well, as inflation had
not shown signs of moderating, while infrastructure bottlenecks
said, the extent of NPAs had risen about half a per cent
to about 3 per cent - 4 per cent. Though, at the moment
there was no cause for concern, there was reason "to
think, plan and act," he said.
economic cycles turn one way or the other, there may be
a lag effect ... there can be consequences," he said,
adding, "It is prudent to take action."
a result of demand exceeding supply, which has been held
down by infrastructural bottlenecks, inflation at above
6 per cent in the second half of 2006, has been above
the Reserve Bank''s tolerance limit of between 5 and 5.5
per cent for the financial year 2006-07, despite the RBI''s
efforts to contain it with monetary measures and the government''s
attempts to drive it down with policy initiatives.
Bank expects credit to grow by of 25 per cent in financial
year 2007-08, compared to the previous year, against a
20-per cent growth in deposits.