Finance Ministry To Initiate Performance Review Of Heads Of 12 Banks

RBI has put 12 public sector banks under watch in view of lagging on certain performance parameters.

40 Shares
EMAIL
PRINT
COMMENTS
Finance Ministry To Initiate Performance Review Of Heads Of 12 Banks
New Delhi: The finance ministry would soon initiate a performance review of heads of public sector banks that are under the RBI's Prompt Corrective Action (PCA) as part of the reform process, official sources said. So far, the Reserve Bank has put 12 public sector banks (PSBs) under watch in view of lagging on certain performance parameters like unexpected level of high non-performing assets (NPAs), low capital level, low return on assets etc. 

These parameters indicate weak financial health of lending institutions and a need to initiate remedial measures to put them on a right course.

Performance review of the top level management of all such banks would be undertaken soon, official sources said. 

As far as capital is concerned, the government has committed adequate funds, they said, adding that now these banks have to prove their mettle on the NPA front.

If these lenders "perform extraordinarily", they will be rewarded, sources added.

In the recently announced Reforms Agenda for Responsive & Responsible PSBs, the government committed Rs 52,311 crore for the 12 banks under PCA as against healthy banks which will be Rs 35,828 crore crore by March 31, 2018.

During the current fiscal, IDBI Bank has been committed the highest infusion of Rs 10,610 crore, followed by Bank of India, Rs 9,232 crore and UCO Bank (Rs 6,507 crore). 

Among other PCA lenders Central Bank of India was committed Rs 5,158 crore, Indian Overseas Bank - Rs 4,694 crore; Oriental Bank of Commerce Rs 3,571 crore; Dena Bank - Rs 3,045 crore; Bank of Maharashtra - Rs 3,173 crore; United Bank of India - Rs 2,634 crore; Corporation Ban Rs 2,187 crore and Allahabad Bank - Rs 1,500 crore by the end of 2017-18.

Following the revision of the PCA guidelines in April 2017, the RBI first placed IDBI Bank under the watch. The series continued till earlier this month when it placed Allahabad Bank, the last in the series, under PCA. 

Last year, RBI said that capital, asset quality and profitability would be the basis of the PCA framework on which the banks would be monitored and has defined three kinds of risk thresholds.

Comments
In a notification issued by RBI that time, the mandatory action that would be taken when a bank breaches the risk threshold includes restriction on dividend payment/remittance of profits, restriction on branch expansion, higher provisions, restriction on management compensation and director's fees.


(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

NDTV Beeps - your daily newsletter

................................ Advertisement ................................

................................ Advertisement ................................

................................ Advertisement ................................