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Bank officers� body demands withdrawal of IRAC norms

By STAFF REPORTER
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GUWAHATI, March 31 - The Assam State Unit of All India Bank Officers� Confederation (AIBOC) has vehemently condemned the recently implemented Income Recognition and Asset Classification (IRAC) norms for the banks by RBI and demanded its immediate withdrawal taking into cognisance the impending NPA burden that the Indian economy will have to sustain and its impact on credit growth which has already been sluggish across the sectors.

�From 180 days now the NPA classification has been changed to 30 days for no scientific reason. Now under the new norms, once a borrower is unable to pay interest for more than 180 days his account is to be regarded as non-performing and the new rule will deny him further credit. With banks handling over 60 per cent of national financial savings, where else will needy businessmen turn to for funds? Thus, starved of funds, businesses which are weak will turn sick,� secretary of Assam unit of AIBOC Dilip Roy Choudhury said.

He said the Reserve Bank of India had been changing the NPA norms periodically. �From the incurred loss model (actual), we moved over to expected loss model (projection). We have been forced to switch over to this model by international agencies more aggressively after the US financial crisis, even though Indian banks were not majorly affected during the infamous crisis of 2008. These asset classification norms were not based on Indian conditions but on US Generally Accepted Accounting Principles and International Financial Reporting Standards (US GAAP and IFRS). As such it is not suitable for Indian economic environment as well,� he said.

The new IRAC norms brought in by RBI is only going to increase the NPA and provisions, he added. It is estimated that all public sector banks and most of the private banks also will make losses due to this revised norms. The net loss to banking system will be almost Rs -lakh crore which will lead to a financial crisis which the country can�t afford now, according to the officers� body.

Condemning the newly introduced asset classification norms, the AIBOC has demanded immediate implementation of the parliamentary committee recommendations on NPA, abolition of taxes on NPA provisioning, changes in asset classification norms, change of provisioning norms, deferment of IND-AS that will entail additional provisioning requirement of estimated Rs 63,000 crore, provision of interest on CRR, reimbursement of expenditure on government schemes, apart from an immediate halt to cross-selling by the banks.

The Assam State Unit of All India Bank Officers� Confederation, the largest officers� organisation in the North Eastern Circle, has also expressed its utter resentment on the Government of Assam�s sudden notification to withdraw the holiday of Good Friday.

�There is huge chunk of Christian population in every nook and corner of the State posted in different bank branches and offices and such an order from the State government has only brought agony and resentment for them,� it said.

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Bank officers� body demands withdrawal of IRAC norms

GUWAHATI, March 31 - The Assam State Unit of All India Bank Officers� Confederation (AIBOC) has vehemently condemned the recently implemented Income Recognition and Asset Classification (IRAC) norms for the banks by RBI and demanded its immediate withdrawal taking into cognisance the impending NPA burden that the Indian economy will have to sustain and its impact on credit growth which has already been sluggish across the sectors.

�From 180 days now the NPA classification has been changed to 30 days for no scientific reason. Now under the new norms, once a borrower is unable to pay interest for more than 180 days his account is to be regarded as non-performing and the new rule will deny him further credit. With banks handling over 60 per cent of national financial savings, where else will needy businessmen turn to for funds? Thus, starved of funds, businesses which are weak will turn sick,� secretary of Assam unit of AIBOC Dilip Roy Choudhury said.

He said the Reserve Bank of India had been changing the NPA norms periodically. �From the incurred loss model (actual), we moved over to expected loss model (projection). We have been forced to switch over to this model by international agencies more aggressively after the US financial crisis, even though Indian banks were not majorly affected during the infamous crisis of 2008. These asset classification norms were not based on Indian conditions but on US Generally Accepted Accounting Principles and International Financial Reporting Standards (US GAAP and IFRS). As such it is not suitable for Indian economic environment as well,� he said.

The new IRAC norms brought in by RBI is only going to increase the NPA and provisions, he added. It is estimated that all public sector banks and most of the private banks also will make losses due to this revised norms. The net loss to banking system will be almost Rs -lakh crore which will lead to a financial crisis which the country can�t afford now, according to the officers� body.

Condemning the newly introduced asset classification norms, the AIBOC has demanded immediate implementation of the parliamentary committee recommendations on NPA, abolition of taxes on NPA provisioning, changes in asset classification norms, change of provisioning norms, deferment of IND-AS that will entail additional provisioning requirement of estimated Rs 63,000 crore, provision of interest on CRR, reimbursement of expenditure on government schemes, apart from an immediate halt to cross-selling by the banks.

The Assam State Unit of All India Bank Officers� Confederation, the largest officers� organisation in the North Eastern Circle, has also expressed its utter resentment on the Government of Assam�s sudden notification to withdraw the holiday of Good Friday.

�There is huge chunk of Christian population in every nook and corner of the State posted in different bank branches and offices and such an order from the State government has only brought agony and resentment for them,� it said.

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