Rajan says RBI working to clean up lenders' balance sheets

Reserve Bank of India Governor Raghuram Rajan said the RBI is working to ensure that commercial lenders are dealing with their stressed assets on a "proactive" basis and are provisioning for them "adequately".

India's banking sector, dominated by two-dozen state-run lenders, is suffering from its highest stressed-assets ratio in 13 years as an economic slowdown hit company earnings, exposing the sector's history of profligate lending.

The RBI is "working with the government and banks to ensure that the stressed assets are dealt with on a proactive basis, and that bank balance sheets both reflect a true and fair picture, and are adequately provisioned," Rajan said in a speech to a research body on Friday.

Rajan had in December said he expected banks to clean up their balance sheets by March 2017. The RBI has since identified some troubled loan accounts and asked lenders to treat those as non-performing even if the borrowers have yet to default.