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"ARCs have failed in our country because their pricing is the most non-transparent. Bring more transparency in the pricing," he said while speaking at the annual Bancon over the weekend here.
He said the central bank is all for resolution of bad assets by banks through the ARC mechanism and also offered to resolve any vexed issues.
An ARC typically picks up a bad loan or a chunk of them from lenders and sell those assets to other lenders after working on the accounts. This helps banks from not making any mandatory provisions in their books, as such loans once sold do not remain in their books.
Arcil, sponsored by State Bank , IDBI Bank , ICICI Bank and Punjab National Bank , was the first ARC to begin operations in the country nearly a decade back.
"ARCs are not transparent in pricing as well in their functioning. We need to bring more transparency into the system in general and into the ARCs in particular," Chakrabarty said.
"We are not saying that the banks cannot resolve their bad assets through ARCs but it has not taken off," he added.
Notably, bad assets jumped to record highs in current fiscal as the economy is traversing through muddy waters.
According to NPAsource.com report, as of the September quarter, net bad loans of 40 listed banks soared 38 percent to Rs 1.3 trillion.
"Net bad assets of the 40 listed banks have jumped 38 percent to Rs 1,28,533 crore during the first half of this fiscal, from Rs 93,109 crore at the end of the last fiscal, and is likely to crore Rs 1.5 lakh crore by the end of the fiscal," the report said.
Out of the total 40 listed banks, 14 banks have reported more than 50 percent jump in their net NPAs during these six months, the study said.
Gross NPAs as of the September quarter stood at Rs 2,29,007 crore, 27 percent higher when compared to Rs 1,79,891 crore as of March quarter for these 40 listed banks.
According to the study, gross NPAs of listed banks have doubled since September 2011, while net NPAs have risen by 140 percent during the same period.
SBI stock price
On November 18, 2013, at 14:10 hrs State Bank of India was quoting at Rs 1747.50, up Rs 25.10, or 1.46 percent. The 52-week high of the share was Rs 2550.00 and the 52-week low was Rs 1452.90.
The company's trailing 12-month (TTM) EPS was at Rs 179.98 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 9.71. The latest book value of the company is Rs 1445.60 per share. At current value, the price-to-book value of the company is 1.21.
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