9 BANKS UNDER PCA SEND RECOVERY PLANS

ther losses over the next few quarters.

“It is also possible that more state banks will be placed in the RBI’s “prompt corrective action” (PCA) framework, which allows the central bank to intervene in a banks’ management, as most are in breach of at least one risk threshold. 11 state banks are already under the PCA framework,” Fitch added.

On an optimistic note, it said that the regulatory efforts to speed up problem-loan resolution could release capital if recoveries prove higher than current provisions, as was the case in some recent resolutions.

Fitch believes that some of the 40 large non performing loan (NPL) accounts currently in the insolvency courts — which constitute 40 to 50 per cent of the NPL stock — could be resolved in FY19, although there remains a risk of legal delays. New Delhi, June 1: As many as 9 PSU banks, which are currently under RBI watch for poor financial health, have submitted a twoyear recovery plan to the government entailing stake sale in subsidiaries and reduction of corporate loan book.

Finance minister Piyush Goyal had last month asked these 11 PSU banks to come up with a plan to strengthen finances and meet the RBI’s capital adequacy norms.

Of these, 9 banks have already submitted report to the department of financial services, an official said.

The 11 banks under Prompt Corrective Action are Dena Bank, Allahabad Bank, UBI, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, CBI, IoB, OBC and Bank of Maharashtra.

Under the PCA, banks face restrictions on distributing dividends and remitting profits.

The owner may be asked to infuse capital into the lender. Besides, the lenders are stopped from expanding their branch networks and need to maintain higher provisions.

Management compensation and directors fees are also capped. The recovery plan as presented include cost cutting, reducing branches size, closing foreign branches, shrinking corporate loan book as well as sell risky assets, the official said. — PTI