Goyal promises help to 11 PSBs under RBI watch list

The Centre may allocate more funds to weak public sector banks laden with huge bad loans as Finance Minister Piyush Goyal on Thursday promised “every possible support” to strengthen their resolve to come out of the “current situation as quickly as possible”.

As many as 11 weak banks including Allahabad Bank, Dena Bank and Bank of India have been brought under the Reserve Bank of India's Prompt Corrective Action (PCA) framework, which restricts their lending activities, debars them from opening new branches, staff recruitment and increasing the size of their loan book.

After a Rs 13,700 crore loan fraud in February, even the Punjab National Bank stares at being included in the PCA framework.

"These 11 banks will be able to continue to serve the common man through more aggressive banking, maintaining the highest standards of ethics and integrity," Goyal told reporters after a meeting with the 11 banks that sat through the day to discuss ways to ameliorate themselves and come up with the kind of support that they require from the government.

Goyal said he will ensure that in the next few days that the Centre gives every possible support to further strengthen these banks.

The Centre had recently allocated Rs 52,311 crore to 11 weak banks to maintain their minimum capital requirement. Apart from this, the Centre also infused Rs 35,828 crore in nine strong banks.

This was a part of Rs 2.11 lakh crore allocation promised by the Centre last year to help public sector banks deal with their bad loans in the next two years.

The government is also readying itself for a second tranche of recapitalisation bonds for the state-owned banks. However, an official said that the government may address the recapitalisation needs of banks under PCA immediately as the second tranche of recap bonds may not be sufficient for them.

Goyal, who is in-charge of the finance ministry till incumbent Arun Jaitley recovers from a kidney transplant surgery, said his priority was to bring back state-owned banks to a robust health and that he will ensure an orderly growth of the industry and highest levels of probity and accountability that is expected of them.

The 11 banks on the RBI’s watch-list are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank, Bank of Maharashtra.

Five banks which could be brought under the PCA are Andhra Bank, Punjab National Bank, Canara Bank, Union Bank and Punjab & Sind Bank.