Banks may not be lending enough if bad debts don't rise during tough times

Posted on: 2017-05-30

Singapore's central bank chief says they're probably not taking on sufficient risks.

According to a report by CNBC, many banks in Asia have seen asset quality deteriorate in a difficult post-crisis climate, but the rise in non-performing loans should be assessed in the context of that environment, Singapore's central bank chief said on Monday.

"Banks are in the business of inter-mediating risks. When risks materialize, as they sometimes do when those who borrow get into difficulties, NPLs must rise," Ravi Menon, managing director of the Monetary Authority of Singapore, said in his opening remarks at the 2017 Symposium on Asian Banking and Finance in the city state.

"This may be odd for a regulator to say, but if NPLs did not rise at all during difficult times, then the banks are probably not lending enough, they're not taking on sufficient risks to promote business expansion or enterprise," he added.

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