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May 16, 2018 09:15 PM IST | Source: PTI

Finance Ministry to review position of 11 PSBs under PCA tomorrow

Under the PCA, banks face restrictions on distributing dividends and remitting profits.

The finance ministry has called a meeting tomorrow of all the 11 state-owned banks under the Reserve Bank's prompt corrective action (PCA) to discuss various measures taken by them to come out of the watch list.

The lenders will make presentations on steps being taken by them and share timeframe within which they expect to come out of PCA, sources said.

As per the revised PCA guidelines released last year, if a bank enters 'Risk Threshold 3', it may be a candidate for amalgamation, reconstruction or even be wound up.

The metrics used for gauging how weak a lender is include net non-performing assets (NPAs) or bad loans, return on assets (RoA) and Tier 1 leverage ratio.

Under the PCA, banks face restrictions on distributing dividends and remitting profits. The owners may also be asked to infuse capital.

That apart, lenders would also be stopped from expanding their branch networks. It would need to maintain higher provisions and management compensation and directors' fees would be capped.

Other 9 banks on the RBI's watch list are United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, and Bank of Maharashtra.
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