PSBs still under PCA framework are United Bank of India, Allahabad Bank, IDBI Bank, Corporation Bank, UCO Bank, Central Bank of India, Dena Bank and Indian Overseas BankNew Delhi: After the Reserve Bank of India (RBI) removed three state-run banks from its prompt corrective action (PCA) plan, Finance Minister Piyush Goyal wishes that the remaining eight lenders would be out of the list soon. The 11 PSU banks on the RBI’s PCA list were not allowed to expand operations or issue fresh big-ticket loans, with their financial performance being given close scrutiny.
Improvement in the overall health of PSBs
Various government steps have helped public sector banks (PSBs) significantly. The result is visible in RBI removing 3 nationalised banks namely, Bank of Maharashtra, Bank of India and Oriental Bank of Commerce on Thursday from its PCA plan for state-run banks having inadequate capital and high levels of bad debt. By removing banks from the list, RBI lifts a variety of restrictions on lending and expansion of businesses.
The PSBs still under PCA framework – which imposes restrictions on lending, preventing them from expanding – are United Bank of India, Allahabad Bank, IDBI Bank, Corporation Bank, UCO Bank, Central Bank of India, Dena Bank and Indian Overseas Bank.
Remaining banks to be out of list soon
Goyal said that given the way the banking sector has improved in recent years, the remaining banks should be out of the PCA list soon. Now with OBC, BoI, and BoM out of the list, eight of the total 20 PSBs are left under the banking regulator’s PCA watch. Prompt Corrective Action involves intervention by the banking regulator so that a ‘weak’ bank takes strong corrective measures to restore its financial health. PCA is imposed on banks whose capital, asset quality and/or profitability do not meet thresholds specified by RBI.
PSU Watch is a business news brand of 27 Frames Communications LLP. It places the spotlight on PSUs, Governance, Bureaucracy, Defence and Public Policy as the sector traverses through a period of radical change.