Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; WP_MatchesMapRegex has a deprecated constructor in /home/thatslyf/public_html/wp-includes/class-wp.php on line 635

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; Translation_Entry has a deprecated constructor in /home/thatslyf/public_html/wp-includes/pomo/entry.php on line 14

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; POMO_Reader has a deprecated constructor in /home/thatslyf/public_html/wp-includes/pomo/streams.php on line 12

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; POMO_FileReader has a deprecated constructor in /home/thatslyf/public_html/wp-includes/pomo/streams.php on line 106

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; POMO_StringReader has a deprecated constructor in /home/thatslyf/public_html/wp-includes/pomo/streams.php on line 150

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; POMO_CachedFileReader has a deprecated constructor in /home/thatslyf/public_html/wp-includes/pomo/streams.php on line 189

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; POMO_CachedIntFileReader has a deprecated constructor in /home/thatslyf/public_html/wp-includes/pomo/streams.php on line 204

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; WP_Widget_Factory has a deprecated constructor in /home/thatslyf/public_html/wp-includes/widgets.php on line 403

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 307

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 308

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 309

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 310

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 317

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 321

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 329

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 332

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 343

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/AlvaroCore V1.0/Alvaro.php on line 347

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; JBWeatherWidget has a deprecated constructor in /home/thatslyf/public_html/wp-content/plugins/jb-weather-widget-2/jbweather.php on line 26

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/plugins/revslider/inc_php/framework/functions_wordpress.class.php on line 240

Notice: load_plugin_textdomain was called with an argument that is deprecated since version 2.7 with no alternative available. in /home/thatslyf/public_html/wp-includes/functions.php on line 3436

Notice: bbp_setup_current_user was called incorrectly. The current user is being initialized without using $wp->init(). Please see Debugging in WordPress for more information. (This message was added in version 2.3.) in /home/thatslyf/public_html/wp-includes/functions.php on line 3486

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; px_widget_facebook has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/widgets.php on line 4

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; px_gallery has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/widgets.php on line 138

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; recentposts has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/widgets.php on line 275

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; px_twitter_widget has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/widgets.php on line 428

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; px_MailChimp_Widget has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/widgets.php on line 558

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; px_social_meida_followers_widget has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/widgets.php on line 1309

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; MCAPI has a deprecated constructor in /home/thatslyf/public_html/wp-content/themes/medianews-theme/include/mailchimpapi/mailchimpapi.class.php on line 3

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/themes/medianews-theme/functions.php on line 71

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/themes/medianews-theme/functions.php on line 74

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/themes/medianews-theme/functions.php on line 76

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/themes/medianews-theme/functions.php on line 79

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/themes/medianews-theme/functions.php on line 82

Deprecated: Function create_function() is deprecated in /home/thatslyf/public_html/wp-content/themes/medianews-theme/functions.php on line 85

Deprecated: Methods with the same name as their class will not be constructors in a future version of PHP; PasswordHash has a deprecated constructor in /home/thatslyf/public_html/wp-includes/class-phpass.php on line 36

Warning: session_start() expects parameter 1 to be array, string given in /home/thatslyf/public_html/wp-includes/plugin.php on line 505
Thatslyf | Is your Bank Safe from merger? Banks to be stricter on Recovery as two more PSU Banks face PCA by RBI. Now IDBI after UCO Bank cannot lend.

Is your Bank Safe from merger? Banks to be stricter on Recovery as two more PSU Banks face PCA by RBI. Now IDBI after UCO Bank cannot lend.

Prompt Corrective Action (PCA) is a measure of strict actions that RBI can take against scheduled banks if they do not meet the minimum performance parameters or simply do not comply to the terms and conditions of the scheme. RBI can take discretionary actions against the banks if they hit the trigger points as marked in the scheme. These trigger points are basically the minimum safety measures a bank must maintain for it not to collapse. If those trigger points are hit, RBI may stop such banks from further lending or impose several other restrictions, like not allowing the banks to increase their stake in subsidiaries or to enter new lines of business or lending indiscriminately or making them skip dividend payments.

1

Much Gung ho shall prevail after the government launches a drive to cleanse the bad loans from banks by taking stricter resolutions on NPA and willful defaulters. The following are the trigger points which led to IDBI and UCO bank facing the brunt of the central bank.

1. CRAR less than 9% but more than 6%
2. CRAR less than 3%
3. CRAR less than 6% but more than 3%
4. Net NPA more than 10% but less than 15%
5. Net NPA more than 15%
6. ROA below 0.25%

While CRAR is an essential criterion, the bigger headache today is the rising NPAs of the Banks.

Effect of high Net NPA %age or Poor CRAR:

RBI can in such a case ask the bank to do the following however RBI is not restricted to only these and may exercise any powers as it deems fit and appropriate ranging from removing the management to changing the board of directors to taking hold of the bank itself. A few measures that RBI can take are:

1. Force bank to take special drive to reduce NPAs.

2. Force bank to review its loan policy.

3. Tell banks to follow suit filed/decreed cases effectively.

4. Upgrade credit appraisal skills.

5. Force bank not to enter new line of business.

6. Ask bank to reduce / skip dividend payments.

7. Reduce stakes in subsidiaries.

8. RBI can order recapitalization.

9. Restriction on inter bank borrowing.

10. Discussion of bank’s board with RBI for corrective actions

11. Can ask to change ownership

12. Can bring in new management or board of directors or both

13. Govt can ask banks to merge if Banks fail to submit recapitalization plan.

14. Guide on Loan review mechanism to be improved.

15. Ask banks not to lend indiscriminately.

The net NPA of some of the scheduled PSBs are listed below:

a. SBI: 3.71%
b. Bank Of Baroda: 4.72%
c. Indian Overseas Bank: 14.30%

d. CANARA: 6.33%
e. Syndicate: 5.21%
f. Vijaya Bank: 4.35%

g. OBC: 8.96%
h. Central Bank of India: 10.20%
i. PNB: 7.81%

j. Corporation Bank: 8.33%
k. Andhra Bank: 6.98%
l. Union Bank: 6.57%

m. Allahabad bank: 8.92%
n. Bank of India: 6.90%
o. Bank of Maharashtra: 11.76%

p. Dena Bank: 10.66%
q. Indian Bank: 4.39%
r. IDBI: 13.21%

s. UCO: 8.94%
t. United bank of India: 10.02%
u. Punjab and Sind Bank: 7.51%

2

While Vijaya bank has lower net NPA, but BOB stands strong as its CRAR and other parameters stand on a firm ground. While it is to be seen how and what measures RBI will take, but it is sure to come that coming days are tougher for bankers as far as bad debts and recovery are concerned. While the board and management will take a stricter look and more rigid stand on Bad debts, the coming days are also not too velvet like for the willful defaulters.

Sources: https://rbi.org.in/Scripts/NotificationUser.aspx?Id=1014&Mode=0

About Author

Dhruva

Dhruva

Dhruva Awasthi is a young and dynamic writer with fresh thoughts and a firm believer that writing is the best form of expression. He crossed the threshold from his mundane arduous work life into the world of writing because of his pure love for penning down the thoughts which entwines his mind. He is an Engineer by profession and a writer by choice. He has a flair for writing on a wide array of genres spreading his wings from politics, food, health, spiritual to poetry, drama and fiction. Dhruva is methodical and punctilious and hopes to bring realism to the table, through his writings and through Thatslyf.

Leave a Comment