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11 Public Sector Banks Under RBI Scanner For Non-Performing Assets

NEWS WORLD INDIA | 0
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| April 9 , 2018 , 11:34 IST

11 public sector banks are reportedly under the scanner of the Reserve Bank of India over the issue of non-performing assets.

As per reports, these banks have been brought under the central bank’s Prompt Corrective Action framework with an aim to check NPAs.

The reports also stated that 5 more banks are set to be brought under the PCA framework.

This comes months after the central government had allotted capital of Rs 52,311 crore to 11 weak banks to maintain their minimum capital requirement. The government also infused Rs 35,828 crore in nine strong banks.

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The 11 banks which are under the scanner of RBI include Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank, Bank of Maharashtra. Five banks which could be brought under the PCA are Andhra Bank, Punjab National Bank, Canara Bank, Union Bank and Punjab & Sind Bank

Reports further said it may take these banks at least another 6-9 months before they report any noticeable improvement in the key regulatory indicators, which will help them come out of PCA. If more state-owned banks are brought under PCA, it will impact the credit availability for the MSME segment.

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Experts suggest that it will take a minimum of 6-9 months for these banks to report any noticeable improvement in the key regulatory indicators, which may help them come out of PCA.

The RBI in April 2017 tightened its PCA framework to turn around lenders with weak operational and financial metrics, and since then 11 banks have been moved to PCA. Depending on the risk thresholds set in PCA rules, the banks are restricted from expanding the number of branches, staff recruitment and increasing the size of their loan book.