Nifty99000 100%

Sensex99000 100%

Article rating: 4.8
Tags:
Article rating: 4.8
Tags:
Article rating: 4.0
Tags:
Article rating: 5.0
Tags:
Article rating: 4.0
Tags:
Article rating: No rating
Tags:
Article rating: 5.0
Tags:
Article rating: 3.7
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 4.3
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
RSS

News

More banks to come out of PCA

Author: PTI/Wednesday, February 27, 2019/Categories: Banking & Financial Services

More banks to come out of PCA

New Delhi - The finance ministry expects three to four more lenders to come out of weak bank list of the Reserve Bank in the next six to eight months on account of improvement in financial health amid capital infusion and falling bad loans.

The recent capital infusion of Rs 48,239 crore in 12 public sector banks (PSBs) will help Corporation Bank and Allahabad Bank to come out of the Prompt Corrective Action (PCA) framework in the next few weeks, sources said.

Corporation Bank is the biggest beneficiary of this round of capital infusion with Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896 crore. This infusion will help these two lenders meet requisite capital thresholds of 7.375 CET-1 ratio, 8.875 per cent Tier I ratio, 10.875 per cent of capital-to-risk weighted assets ratio (CRAR) and the net NPA ratio threshold of below 6 per cent.

The RBI may in the next few weeks take a decision to remove these two lenders out of PCA supervision as they had done in the case of Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC) last month after capital infusion in December, sources said.

With the removal of three banks on January 31, the list has already come down to 8 from 11.

Dena Bank, which is among eight entities under PCA, will cease to exist from April 1, 2019. So, the list will further shorten with the bank merging with Bank of Baroda beginning next fiscal, sources said.

IDBI Bank, now majority owned by LIC, is also improving its financial health and bringing down its net non-performing assets (NPAs) in a bid to come out of the PCA supervision.

If the bank continue to improve its health, it is anticipated that the RBI would lift the curb from IDBI Bank after September numbers.

Besides, Central Bank and UCO Bank are trying to improve their parameters on mission mode.

So, sources said, four more banks are likely see curb lifted by RBI on them in 6-8 months.

Last month, Financial Services Secretary Rajiv Kumar had said: "Government's sustained 4R's (Recognition, Recapitalization, Resolution, and Reform) strategy for banking transformation delivers again. 3 better-performing PSBs (BoM, BoI & OBC) exit PCA. Banks need to be more responsible, adopt high underwriting & risk management standards to avoid recurrence".

Kumar, who has been credited with undertaking multiple reforms in the banking sector, provided record amount of capital infusion in the public sector banks (PSBs).

Since commencement of clean-up in 2015-16, the recapitalisation has crossed over Rs 3 lakh crore through mix of budgetary support and market raising helping banks to make adequate provisions for the bad loans. As a result, there has been reversal in the deteriorating bad loan situation and there has been record loan recovery during the current fiscal.

Various initiatives taken by the government have yielded results, with the bad loans of public sector banks declining by over Rs 23,860 crore in the first half of the current fiscal.

At the same time, PSBs have also made a record recovery of Rs 60,726 crore in the first half of the current financial year, which is more than double the amount recovered in the corresponding period last year.

Print Rate this article:
No rating

Number of views (252)/Comments (0)

rajyashree guha

PTI

Other posts by PTI
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free