Talking to reporters on the sidelines of the Ficci-IBA summit in Mumbai, the deputy governor said, "We don't see any systemic risks from the current trend of rising non-performing assets. But, there could be some sectoral risks going forward."
He was responding to a question in the wake of the rising interest regime as the central bank has jacked up its key lending rate by a whopping 425 basis points in the past 15 months to batten down inflation and the result measures by banks to pass on the cost to consumers.
He further said, "I would not say we are particularly worried about retail loan segment, but yes, the retail segment is the one that is likely to feel the pressure."
Banks have been witnessing rising risks from small and medium scale industries as well as in their unsecured portfolios, which primarily consist of personal loans and credit cards business apart from the home loans front.
At the post-policy interaction with the media the Governor D Subbarao had also said that the bankers had toldhim that there were no systemic risks as of now for banks, as the interest rate gets tightened.
On Tuesday, the chief financial officer of the nation's largest lender Diwakar Gupta had said that his bank's Rs 7,000 crore (Rs 70 billion) education loan has been witnessing pressure and the level of the stressed assets have reached 4 per cent of this exposure.
The Kolkata-based United Bank chairman and managing director Bhaskar Sen, too, said that there are rising risks to his assets, especially from the SMEs and the retail sector and that he may look at increasing in the tenor of the loan than increasing the EMIs.
On the impact of the Basel III on the domestic banks, especially on the state-run banks, which control over 70 per cent of the banking assets in the domestic system, Sinha said, the government will have to infuse funds into the banks to ensure that they are adequately capitalised so that banks can continue to fuel the economy.
Meanwhile Crisil Ratings director Ramaraj Pai said the 26 public sector banks would need a whopping Rs 8 trillion in core capital by 2019, when the Basel III norms will be implemented.
As of FY2010, these banks had a core (Tier I) of capital of only Rs 70,000 crore (Rs 700 billion), which is well above the Basel II requirement.