Government

October 04, 2018

PSBs’ REQUEST FOR RELAXATION IN PCA NORMS ACCEPTED BY GOVT


Arun-Jaitley

Public sector banks (PSBs) have submitted a petition to the government, seeking relaxation of PCA (prompt corrective action) norms that were last year tightened by the Reserve Bank of India (RBI) following a meteoric rise in bank non-performing assets (NPAs).

Introduced in 2002 and to be implemented between 2013 and 2019, the PCA norms last year were revisited and tightened by the central bank.

PCA norms warrant restrictions on banks in terms of distributing dividends and remitting profits. They also warrant that banks do not expand their branch networks and also maintain higher provisions against already declared NPAs. Under PCA limitations, top management and directors’ fees, too, are controlled. The Chairmen and Managing Directors of 21 PSBs last week submitted the petition to Finance Minister Arun Jaitley in this regard.

The government, which is the largest shareholder in many of these troubled banks, is for giving them the leeway needed to boost their balance sheets. “Some of the banks said the PCA guidelines should be revisited because that is indirectly impacting their lending abilities,” said Mr Jaitley, adding that the government would take up the matter with the RBI.

Rajiv Kumar, Secretary, Department of Financial Services, said, “PSBs are seeking alignment of PCA provisions with the globally accepted Basel norms.”

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