Comment on the following: Banks should lend prudently and with care.

Banking is a risky business. It works on a very high level of leverage. Bankers are exposed to high levels of credit risks. Increasing rates of Non Performing Assets (NPAs) in the banking sector is a cause of concern for the healthy growth of the economy. A major safeguard in this regard has been the prescription of prudential norms relating to provisioning and capital adequacy by the Reserve Bank of India. These combined with higher standards of operational accountability and appraisal of credit risks would ensure that banks lend prudently and with care.