corrective | Common News Update

Sep282019 by adminNo Comments

RBI initiates prompt corrective action for Lakshmi Vilas Bank after directors probed for alleged fraud

Finance

The Reserve Bank has initiated Prompt Corrective Action (PCA) against Lakshmi Vilas Bank (LVB) due to high level of bad loans, lack of sufficient capital to manage risks and negative return on assets for two consecutive years, the private sector lender said on Saturday. The RBI move comes amidst the Delhi Police's Economic Offences Wing registering a complaint against the board of LVB alleging cheating and misappropriation of funds. The regulatory action may cast doubts over the proposed merger of Indiabulls Housing Finance with LVB, which is awaiting RBI nod. The Delhi High Court on Friday agreed to hear a petition alleging Indiabulls gave loans worth crores of rupees to shell companies. In a regulatory filing, LVB said RBI has taken the action "on account of high net NPAs, insufficient C...

RBI’s prompt corrective action just baby steps before weak banks leap

Finance

The Mint Street and North Block are in a tug of war on the Prompt Corrective Action (PCA) framework for weak banks. The finance ministry wants to soften the restrictions on banks under PCA. RBI, which imposes them, is resisting it. There could be more to this than meets the eye. “There is an assertion being made in some circles that imposition of the PCA has starved the Indian economy of credit. There is little factual basis for this assertion, either for the overall economy or at sectoral level… There is also a call for more lending by PCA banks to large industries where the overall credit growth remains muted,” Reserve Bank of India deputy governor Viral Acharya said earlier this month. The government was demanding dilution of restrictions, such as prohibition on lendi...

RBI puts Dena Bank under prompt corrective action

Finance

NEW DELHI: Reserve Bank has initiated prompt corrective action against public sector lender Dena Bank in view of high non-performing loans, restricting the bank from giving fresh credit and new hiring. The public sector lender yesterday reported widening of its net loss to Rs 1,225.42 crore in the March quarter on mounting bad loans and higher provisioning to cover them. The net loss stood at Rs 575.26 crore in the January-March quarter of 2016-17. Sequentially, the loss widened from Rs 380.07 crore in December quarter of 2017-18. "Reserve Bank of India, vide their letter dated May 31, 2017, has initiated Prompt Corrective Action for Dena Bank and imposed certain restrictions, in view of high Net NPA and negative RoA ( return on assets)," the bank said in a regulatory filing. In continuati...