S S Mundra, deputy governor of the Reserve Bank of India (RBI), on Friday said that Banks should continue their balance sheet clean-up and aspire to take the provision coverage ratio to 70 per cent levels. He also said that bank employees should not fear about job losses even as public sector banks are heading for mergers.
"Banks should not slow down their clean-up exercise which they are doing now. Even if the required classification and provision happens, I'd strongly urge them to continue to keep aside money, keep on improving their PCR till it reaches a strong level," he said in a seminar.
The RBI has been targeting to clean up bank balance sheets by March 2017. A bulk of the stress has come from the corporate loans given out over the last five years and the state-run lenders are the worst hit. Mudra conceded that many lenders have profited from the retail business but added that such small-ticket advances should not be seen as a "panacea" for their current ailments.