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13
December 2018
 |
| RBI (The Total Investment & Insurance Solutions) |
Newly-appointed Reserve Bank governor
Shaktikanta Das Thursday met with the heads of public sector banks who sought
some relaxations in the prompt corrective action (PCA) framework and the
one-day default norms announced by the RBI in its February 12 circular. The Total Investment & Insurance
Solutions
The meeting took place a day ahead of the
crucial meeting of the central board of RBI here, which will take up a host of
contentious issues, including the PCA norms. The Total Investment & Insurance Solutions
Das, along with his four deputy governors,
discussed various issues being faced by the banks, including that on liquidity
situation, and also deliberated on the crisis in the non-bank lenders space. The Total Investment & Insurance
Solutions
The lenders who attended the meeting included
State Bank of India, Punjab National Bank NSE 0.78 % , IDBI Bank NSE 0.57 % ,
Union Bank of India, Central Bank of India and Dena Bank, among others.
"We have requested the governor to ease the PCA norms, which we will feel
are very stringent," said a banker.
The Total Investment & Insurance Solutions
Of the 21 state-owned banks, as many as 11
are under the PCA framework, which imposes lending and other restrictions on
weak lenders. These lenders collectively control around a fifth of the credit
and deposits in the system, thus crimping credit flow to the industry--
something a poll-bound government is keen to resolve. The Total Investment & Insurance Solutions
The banks under the PCA are Allahabad Bank
NSE 0.00 % , United Bank of India, Corporation Bank, IDBI Bank, Uco Bank, Bank
of India, Central Bank of India, Indian Overseas Bank NSE -0.34 % , Oriental
Bank of Commerce, Dena Bank, and Bank of Maharashtra. The bankers also sought
some easing in the one-day default norm announced in the February 12 RBI
circular, said another banker. The
Total Investment & Insurance Solutions
The meeting between the RBI and banks lasted
for nearly an hour. "The basic purpose of the meeting was to create a
dialogue between the regulator and bankers. There were some general
deliberations," Punjab National Bank managing director Sunil Mehta told PTI
without offering details. 12/13/2018 Gov Shaktikanta Das told to ease PCA,
one-day default norms by PSB heads On Friday, the RBI board will discuss issues
relating to transfer of RBI's surplus funds to the government, and relaxation
in PCA framework.
The government, which is facing cash-crunch
ahead of the elections and already drawn down almost 104 percent of the
budgeted borrowing, wants at least a third of the Rs 9.6 trillion cash reserves
that the central bank sits on and the RBI is not ready to part with any. The Total Investment & Insurance
Solutions
Following the tiff between the two, which was
one of the key issues in the past few months, the two at the November 19
central board meeting had agreed to set up a committee to to determine the
appropriate levels of reserves the central bank ought to hold. But North Block
and the Mint Street mandarins are having differences over who will head the
panel.
While
government is reportedly keen on making ex-governor Bimal Jalan, who broadly
supports the idea, RBI wants its ex-deputy Rakesh Mohan to chair the panel
which is yet to be formed. All these finally forced the past incumbent Urjit
Patel to announce his departure from the office this Monday, leaving everyone
surprised. The Total Investment &
Insurance Solutions
The last board has reportedly decided to
refer the issue of relaxing prompt corrective action (PCA) framework for weak
banks to the Board of Financial Supervision (BFS) of RBI. It also decided on a
slew of measures including a restructuring scheme for MSMEs with credit
facilities of up to Rs 25 crore and giving banks some concession on capital
adequacy norms. The Total Investment
& Insurance Solutions
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