Banks under PCA to submit future plan tomorrow

After the government met with the heads of banks under prompt corrective action recently, each of the banks will submit a specific plan for the way forward for them by Friday, Financial Services and Secretary Rajiv Kumar said on Wednesday.

He was speaking on the sidelines of a seminar by Mi- cro Units Development and Refinance Agency on jobs and entrepreneurship.

The plan by the public sector banks will include their business strategy, niche areas, sale of non-core assets and estimate of how much capital they need, Kumar said. Currently eleven of the 21 state-owned banks are under the RBI’s corrective action plan.

Further, after they de- clared their Jan-Mar results, RBI has tightened the norms under prompt corrective action for banks such as restricting Dena Bank from taking on fresh credit exposure or hiring staff. It has also asked Allahabad Bank to restrict expansion of its risk-weighted assets, cut exposure to unrated and highrisk advances, restrict creation of non-banking assets and avoid raising or renew- ing wholesale high-cost bulk deposits or certificate of deposits.

With respect to capital requirements of public sector banks in the wake of the humungous losses reported by most of them in Jan-Mar, Kumar said that the 650-blnrupee capital budgeted for 2018-19 under the recapitalisation plan is "sufficient" for banks to meet their regulatory capital requirements.