Banks to come out of PCA framework by this fiscal: Rajiv Kumar
Various measures taken by the government including implementation of Insolvency and Bankruptcy Code has yielded good results.
New Delhi: Asserting that the worst is behind for state-owned lenders, Financial Services Secretary Rajiv Kumar on Thursday expressed hope that the banks would come out of the Prompt Corrective Action (PCA) framework this fiscal.
As many as 11 out of 21 banks are under the RBI's watch list. Of these, two banks -- Dena Bank and Allahabad Bank -- are facing restriction on expansion of business.
Various measures taken by the government including implementation of Insolvency and Bankruptcy Code (IBC) has yielded good results in terms of reining bad loans and increasing recovery, he told reporters here.
Noting that the resurgent public sector banks are growth engines, Kumar said, "cleaning of balance sheets has put worst behind. Banks have made recovery of Rs 36,551 crore during the first quarter registering a 49 per cent growth over the last fiscal."
At the same time, operating profit has risen by 11.5 per cent while losses fell 73.5 per cent on quarter on quarter basis, he said, adding asset quality has been addressed through falling NPA slippage.
Provision Coverage Ratio of banks have reached a healthy level of 63.8 per cent, he added. With all these efforts, he said, "I am sure the banks will come out of PCA this fiscal."
The resolve of government is extremely clear that every stakeholder has to be responsible, he said. "Those who are not prudently behaving will have to face the consequences. The NPAs are also decreasing. Credit growth is simultaneously taking place," he said.
With regard to capital, he said, "as and when they (banks) require. Some of it has already been given. As recoveries are taking place, there is possibility that some banks will not need it. As of now there is nobody breaching the regulatory norms.
We are committed to maintain their regulatory capital." NPAs are by and large recognised, provisioning by and large made, the recoveries are on its course through NCLT and outside NCLT, he said, adding, the creditor-debtor relationship is under tremendous change.