RBI puts restriction on two more lenders

NEW DELHI: After Dena Bank, the RBI now is likely to impose certain restrictions on couple of more public sector lenders under the Prompt Corrective Action (PCA) mechanism due to worsening asset quality, a source said. In view of mounting non-performing assets (NPAs), the RBI on Saturday directed Dena Bank not to issue any fresh loans and hire new personnel.

Already, there are 11 banks, out of 21 state-owned banks, under the PCA of RBI because of their weak financials. One or two more banks may face PCA like Dena Bank if their quarterly numbers indicate further erosion of capital and unabated rise in net NPAs, a senior official of a state bank said.

The RBI makes discretion, depending on the risk assessment, about what kind of restriction it will impose on a bank, the official said. The recent tight prudential norms released by the RBI on February 12 have added to the woes, another official said. Meanwhile, the finance ministry has called a meeting of 11 stressed banks, which are under the PCA framework of the RBI on May 17, to discuss and deliberate on implementation of reforms agenda. The 11 banks on the RBI's watchlist are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra.