Ficci `blames' SSIs for NPAs

Ficci `blames' SSIs for NPAs
Agencies

SEPT 18: The role and responsibility of industry in piling up of non-performing assets (NPAs) worth Rs 52,000 crore and "the myth that the industry is entirely responsible" for it is a `misconception,' an apex chamber has said.

"A very large proportion actually reflects the principal sum tied in NPAs. The balance of 70% is interest and penal interest charged over extended period. In many cases, the interest charges have been as high as 28%, a rate which no business can earn and pay on any reasonable assumption," it says.

A categorisation of NPAs of public sector banks was attempted in 1985-86 by the Reserve Bank of India with the introduction of a "health code system" in Banks. The code attempted to classify the quality or health of individual advances through classification in eight categories.

These are: satisfactory, irregular, sick-viable, sick-non viable, sticky, advances recalled, suit file accounts, decreed debts, bad and doubtful debts. New forms for recognition of income basis of health code system were introduced subsequently in 1989 under which banks were advised to recognise income only on realisation basis for accounts under the suit filed accounts and codes above.