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RBI's Prompt Corrective Action May Be Invoked On 6 More PSU Banks


As per a leading business daily report, six more PSU Banks including the likes of PNB, Syndicate Bank and Union Bank of India are currently reeling under the risk of being included in the RBI's prompt corrective action measure. And if the restrictions are put in place for these lenders by the central bank, the number of PSBs under the PCA framework will increase to 17.

RBI's Prompt Corrective Action May Be Invoked On 6 More PSU Banks

Currently, state-owned banks under PCA 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 and Bank of Maharashtra.

A senior finance ministry official however said that as these banks do not lag behind on all performance metrics they can be given some leverage. And in a case when they are not put under PCA, government's plan to sell healthy loans of weaker banks to stronger lenders may work out.

Last month, RBI invoked prompt corrective against Dena Bank and Allahabad bank. As part of it, Dena Bank was restricted from any fresh lending activities whereas in case of Allahabad Bank, the lender was asked to reduce exposure to high risk and unrated advances.

Under the PCA framework, several curbs or restrictions are put in place for the lenders such as in relation to expansion, lending activities, hiring, restructuring, audits, dividend payment etc. if warranted.

But as banks have affirmed to recover dues in one or two quarters, the RBI might provide some leeway as in a case if banks are placed under the PCA framework, their turnaround will take more time.

Last week, the interim finance minister Piyush Goyal met chiefs of PSU Banks in Mumbai and set-up a committee to work out resolution of NPA crisis at state-run banks in a speedy manner.


Government Mulls Reconstruction Company To Deal with Bank NPAs

Story first published: Monday, June 11, 2018, 14:39 [IST]
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