NBFCs asset quality review to find out real position of NPAs

Asset Quality Review is a detailed and thorough inspection of loan books by the regulator. Repayment capacity of borrowers is also very important. An asset quality review is  more like a stress test of the loan portfolio done by the regulator. This exercise is very common in the developed world. Five years ago, the RBI under the former governor Raghuram Rajan had initiated an asset quality review in the banking sector. That exercise resulted in NPAs increasing from Rupees 4 lakh crore to Rupees 10 lakh crore in the banking system. The Reserve Bank of India should do an Asset Quality Review of the  Non Banking Finance Companies or the NBFCs , with a lending book of Rupees 20 lakh crore plus. Anand Adhikari, Executive Editor, Business Today explains.

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