New Delhi : Eleven public sector banks that are under the RBI’s watchlist for mounting bad loans on Tuesday expressed confidence before a parliamentary committee that they would emerge out of the central bank’s Prompt Corrective Action (PCA) framework by 2020, sources said.
Concerns were also raised about the “stagnation in lending operations” of state-owned banks during the meeting of the Standing Committee on Finance, headed by Congress leader M Veerappa Moily.
Sources said top officials of the 11-banks — IDBI Bank, UCO Bank, Central Bank of India, Bank of India, Indian Overseas Bank, Dena Bank, Oriental Bank of Commerce, Bank of Maharashtra, United Bank of India, Corporation Bank and Allahabad Bank — made presentations before the panel and responded to queries.
“They (the banks under PCA) talked about the roadmap to deal with their NPAs and expressed confidence of coming out of the RBI’s Prompt Corrective Action framework by 2020,” sources said after the meeting. Under the PCA, banks face restrictions on distributing dividends and remitting profits. The owner may be asked to infuse capital into the lender. That apart, lenders will also be stopped from expanding their branch networks. These would need to maintain higher provisions, and management compensation and directors’ fee will be capped.
Banks have to comply with the global norms on capital adequacy (Basel III) and make provision for non-performing assets, which have constrained lending operations.
Besides, arrests and spate of cases against current and former bankers have created scare among the banks hitting the lending operations.
The banking sector is grappling with rising NPAs, which touched Rs 8.99 lakh crore or 10.11 per cent of total advances at December-end 2017.
