Mumbai, May 14: RBI has asked public sector lender Dena Bank to stop lending to new borrowers. According to a Business Standard report, RBI has put further restrictions on providing fresh credit exposure and hiring new personnel. Dena Bank is without a managing director and chief executive officer after Ashwani Kumar resigned office last year. Currently, Senior Executive Director Ramesh Singh is in charge. Dena Bank's net loss widened to Rs 12.25 billion in the fourth quarter ended March 2018 due to increasing bad loans and higher provisioning. The stock today is trading at Rs 17.15, down 7 percent.
According to a PTI report, after Dena Bank, RBI is likely to impose certain restrictions on couple of more public sector lenders under the Prompt Corrective Action (PCA) mechanism due to deteriorating asset quality. According to the report, "one or two more banks may face PCA like Dena Bank if their quarterly numbers indicate further erosion of capital and unabated rise in net NPAs", a senior official of a public sector bank has been quoted.
According to a Business Standard report, the credit and financial profiles of Bank of Maharashtra, Oriental Bank of Commerce, Allahabad Bank and UCO Bank are in bad shape — all these are under PCA. None of the five has reported any improvement in their recently declared January to March quarter results, as the level of net non-performing assets (NPAs) remained high and return on assets (RoA) remained in the negative in 2017-18.
Already, there are 11 banks, out of 21 state-owned banks, under the PCA of the Reserve Bank because of their weak financials. The 11 banks on the RBI's watchlist 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 and Bank of Maharashtra. Together, these banks accounted for Rs 52,311 crore of the Rs 88,139-crore capital infusion plan (through bonds and budgetary support) announced by the government for 2017-18.
(With Inputs from PTI)