Out of 21 listed state-run banks that contribute to about two-third of the economy’s total loans, 11 are under a PCA planNew Delhi: In order to raise their ability to lend, the finance ministry and the Reserve Bank of India (RBI) will likely relieve curbs on some banks under the prompt corrective action (PCA) plan, following the Central bank panel’s review of their December quarter results, a government official with knowledge of the matter, said. Out of 21 listed state-run banks that contribute to about two-third of the economy’s total loans, 11 are under a PCA plan.
Only those lenders showing substantial progress in addressing bad loans will be relieved. “We are not arguing for all banks but only for those where relaxation of norms will aid faster recovery,” the official, said, adding that some banks may be able to leave the PCA framework as early as next month.
With the government last month infusing capital worth Rs 41,000 crore in some banks to help them abide by the RBI’s capital ratios, the official believes that now the case for relaxing curbs is stronger.
“We have taken care of the capital needs. The banks have not only shown improvement on recoveries but have further de-risked their portfolios,” the official said.
“Gross bad loans of public sector banks have declined by Rs 23,860 crore in the first half of the financial year. There has been a record recovery of Rs 60,000 crore. The RBI has to take note of this,” the official added.
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