NEW DELHI: Terming the lending restriction on some banks as brief phenomenon, Financial Services Secretary Rajiv Kumar on Monday mentioned the status of all 11 state-owned banks below advised corrective action (PCA) of the RBI can be reviewed on May 17.
The assessment assembly would planned on steps taken through these banks to come out of the PCA status.
"We have requested all of them (banks) to join us on May 17. The review meeting is happening on May 17. So, they have taken measures to come out of it as these (PCA actions) are temporary phenomenon," Kumar advised journalists.
He additional mentioned the banks that are out of the PCA ambit have a the most important role to play within the financial system.
"The non-PCA banks have to lead the growth. Loan demand is picking up, so they have to support economic activity," Kumar mentioned.
Meanwhile, Allahabad Bank these days mentioned the RBI has imposed restriction on lending and deposit taking through the bank following deterioration in its monetary health.
Earlier closing week, public sector Dena Bank was also put below restriction through the RBI with regards to lending and recruitment through the bank owing to high unhealthy loans on its books.
Dena Bank's gross non-performing property (NPAs) have hit a high of 22.four in step with cent of the gross advances as on March 31, 2018 (Rs 16,361.44 crore), from 16.27 in step with cent as of end-March 2017 (Rs 12,618.73 crore).
Net NPAs have been also up at 11.95 in step with cent (Rs 7,838.78 crore) from 10.66 in step with cent (Rs 7,735.12 crore).
The high level of NPAs resulted into the bank reporting widening of its internet loss to Rs 1,225.42 crore within the March quarter from a internet loss of Rs 575.26 crore in the similar period yr earlier.
Speaking on Dena Bank, Kumar mentioned, "If you read the reforms schedule it very obviously say that each PCA bank will adopt the differentiated banking strategy.
"There have been prerequisites that they will now not increase RWAs (risk weighted property). So therefore, stay connecting dots. Don't see any action in isolation. It is occurring step-by-step and it is going to stay taking place till whole cleaning takes position."
Kumar mentioned, albeit a measure like PCA, each bank is an editorial of religion.
"Wth each bank, folks's emotion, culture and sentiments are hooked up. So PCA, non-PCA is just a brief phenomenon with regards to cleaning exercise. If large quantity of cleaning has to take place, it's important to halt for sometime. In the cleaning exercise you can't shy away from dust," he mentioned.
As in step with the revised PCA pointers released closing yr, if a bank enters 'Risk Threshold three', it may be a candidate for amalgamation, reconstruction or even be wound up. Among the various metrics which might be used to gauge a lender's weakness are capital, internet NPAs, RoA and Tier 1 leverage ratio etc.
Under the PCA, banks face restrictions on distributing dividends and remitting earnings. The owner could also be requested to infuse capital into the lender. That aside, lenders would also be stopped from expanding their branch networks. It would want to maintain higher provisions and management reimbursement and directors' fees can be capped.
The assessment assembly would planned on steps taken through these banks to come out of the PCA status.
"We have requested all of them (banks) to join us on May 17. The review meeting is happening on May 17. So, they have taken measures to come out of it as these (PCA actions) are temporary phenomenon," Kumar advised journalists.
He additional mentioned the banks that are out of the PCA ambit have a the most important role to play within the financial system.
"The non-PCA banks have to lead the growth. Loan demand is picking up, so they have to support economic activity," Kumar mentioned.
Meanwhile, Allahabad Bank these days mentioned the RBI has imposed restriction on lending and deposit taking through the bank following deterioration in its monetary health.
Earlier closing week, public sector Dena Bank was also put below restriction through the RBI with regards to lending and recruitment through the bank owing to high unhealthy loans on its books.
Dena Bank's gross non-performing property (NPAs) have hit a high of 22.four in step with cent of the gross advances as on March 31, 2018 (Rs 16,361.44 crore), from 16.27 in step with cent as of end-March 2017 (Rs 12,618.73 crore).
Net NPAs have been also up at 11.95 in step with cent (Rs 7,838.78 crore) from 10.66 in step with cent (Rs 7,735.12 crore).
The high level of NPAs resulted into the bank reporting widening of its internet loss to Rs 1,225.42 crore within the March quarter from a internet loss of Rs 575.26 crore in the similar period yr earlier.
Speaking on Dena Bank, Kumar mentioned, "If you read the reforms schedule it very obviously say that each PCA bank will adopt the differentiated banking strategy.
"There have been prerequisites that they will now not increase RWAs (risk weighted property). So therefore, stay connecting dots. Don't see any action in isolation. It is occurring step-by-step and it is going to stay taking place till whole cleaning takes position."
Kumar mentioned, albeit a measure like PCA, each bank is an editorial of religion.
"Wth each bank, folks's emotion, culture and sentiments are hooked up. So PCA, non-PCA is just a brief phenomenon with regards to cleaning exercise. If large quantity of cleaning has to take place, it's important to halt for sometime. In the cleaning exercise you can't shy away from dust," he mentioned.
As in step with the revised PCA pointers released closing yr, if a bank enters 'Risk Threshold three', it may be a candidate for amalgamation, reconstruction or even be wound up. Among the various metrics which might be used to gauge a lender's weakness are capital, internet NPAs, RoA and Tier 1 leverage ratio etc.
Under the PCA, banks face restrictions on distributing dividends and remitting earnings. The owner could also be requested to infuse capital into the lender. That aside, lenders would also be stopped from expanding their branch networks. It would want to maintain higher provisions and management reimbursement and directors' fees can be capped.
Government to review position of 11 PSBs under PCA on May 17
![Government to review position of 11 PSBs under PCA on May 17]()
Reviewed by Kailash
on
May 15, 2018
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