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The Reserve Bank of India may now turn its focus on Allahabad Bank, Central Bank of India and Andhra Bank as their dodgy loans and provision for loan losses are getting precariously close to that of Indian Overseas Bank's -the bank on which the central bank has imposed restrictions on branch expansion.
On Monday, the Chennai-based Indian Overseas Bank had informed the Bombay Stock Exchange that the RBI has initiated a Prompt Corrective Action (PCA) on the bank, which is triggered if bad loans rise above 10 per cent, capital adequacy ratio slips below 9 per cent, and return on assets falls below 0.25 per cent.
According to a report by Asian Markets Securities, in case of some public sector banks, the gross impaired loans -which includes gross non-performing assets and gross restructured loans -have crossed 15 per cent. This comes at a time when demand for credit has dried up and slippages continue to be at an elevated level which in turn could hurt banks' earnings.
The report says that as on March 2014-15, the gross impaired loans of Central Bank was 21.3 per cent, Andhra Bank's was 16.4 per cent, Allahabad Bank's was 16.6 per cent and Punjab National Bank's was 15.9 per cent. During the same period, the provision coverage ratio -the total provisions set aside to write off bad loans -is less than 60 per cent.
Banking experts said the move to impose PCA on Indian Overseas Bank was taken after the RBI inspected the bank and found several irregularities.
The bank cannot open new branches, declare dividend and recruit new employees without RBI's approval.
"However, the regu lator has not placed any restrictions on lending, which means that the regulator is more concerned about the way the bank is run," they added. In a notice to the ex change, the bank has said that "this action will not have any material impact on the growth prospects performance of the bank. The directions given by the RBI are for improving its internal controls and consolidation of its activities".
In the past, the central bank had initiated Prompt Corrective Action on United Bank of India after it came to light that the bank's bad loans were much more than declared.
The restrictions were, however, lifted after two years once its performance improved.
Source : Economic Times
On Monday, the Chennai-based Indian Overseas Bank had informed the Bombay Stock Exchange that the RBI has initiated a Prompt Corrective Action (PCA) on the bank, which is triggered if bad loans rise above 10 per cent, capital adequacy ratio slips below 9 per cent, and return on assets falls below 0.25 per cent.
According to a report by Asian Markets Securities, in case of some public sector banks, the gross impaired loans -which includes gross non-performing assets and gross restructured loans -have crossed 15 per cent. This comes at a time when demand for credit has dried up and slippages continue to be at an elevated level which in turn could hurt banks' earnings.
The report says that as on March 2014-15, the gross impaired loans of Central Bank was 21.3 per cent, Andhra Bank's was 16.4 per cent, Allahabad Bank's was 16.6 per cent and Punjab National Bank's was 15.9 per cent. During the same period, the provision coverage ratio -the total provisions set aside to write off bad loans -is less than 60 per cent.
Banking experts said the move to impose PCA on Indian Overseas Bank was taken after the RBI inspected the bank and found several irregularities.
The bank cannot open new branches, declare dividend and recruit new employees without RBI's approval.
"However, the regu lator has not placed any restrictions on lending, which means that the regulator is more concerned about the way the bank is run," they added. In a notice to the ex change, the bank has said that "this action will not have any material impact on the growth prospects performance of the bank. The directions given by the RBI are for improving its internal controls and consolidation of its activities".
In the past, the central bank had initiated Prompt Corrective Action on United Bank of India after it came to light that the bank's bad loans were much more than declared.
The restrictions were, however, lifted after two years once its performance improved.
Source : Economic Times
1 comments:
Regarding Service branches working on State Govt. / Govt. Holidays still persists and continues. Neither the unions nor the Bank management is interested to take any intitiatives. The irony is working on holidays during festival times. Deepavali and Pongal are important festivals in Tamil Nadu , like wise Ganesh Chathurthi is important festival in Mumbai , Durga Pooja is important festival in Kolkata. RBI is stubbornly refuses granting extension on these important festival days even for One day even though Banks give undertaking for handling the problem arising out with delayed credit to customers , it not only hurts the sentiments of the people and Banking workforce but also makes the cultural values to depreciate and diminish. NPCi says lots things possible in technology 24x7 , but we humans can we work like machine without pain and pleasure...like a machine . Even the Political stalwarts like BJP talks about Hindutava but Holiday for Deepavali is deprived in the same Country ... for some people ...Even Dravidian parties in the South remain silent on this ...All implies selfish attitudes and don't care attitude for the people or let some group or some people suffer..... All these leads to cultural degeneration and eroding of moral and spiritual values of INDIA. Will atleast my men will wakeup now !!! and ACT ??? Just 10 days left for Deepavali ...
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