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Not Able To Grow Due To RBI Pressure, Say Public Sector Banks
Swarajya Staff
Sep 27, 2018, 11:53 AM | Updated 11:53 AM IST
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Public Sector Banks (PSBs) have expressed deep unhappiness with the Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA) and believe that guidelines formulated under this measure are constricting their ability to grow. The PCA norms were introduced by the RBI to protect financially weak banks from going under.
The reports on PSB’s apprehensions vis-a-vis the PCA norms emerged after Finance Minister Arun Jaitley attended the annual performance review meeting of public sector banks. Nearly 90 per cent of the non-performing loans in the Indian banking system are estimated to be held by PSBs, with 11 out of 21 state banks under the RBI’s PCA programme.
It is being reported that the Central government has asked the RBI to reconsider the three trigger points under the PCA framework, in a bid to provide some leeway to the beleaguered PSBs. The RBI considers the net non-performing assets, minimum capital requirement and profitability criteria norms before recommending that a bank be placed under PCA.
As the PCA guidelines allow the regulator RBI to impose sanctions on banks covered by PCA, the PSBs have expressed the grouse that their lending ability is being hampered which is placing further pressures on their performance.
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