AIBOC opposes prompt corrective action by RBI in PSBs

Source: The Hitavada      Date: 07 Jan 2018 09:48:29


Business Bureau,

All India Bank Officers’ Confederation (AIBOC), the largest officers’ organisation having membership of around 3,20,000 officers, questions the imposition of the norms of prompt corrective action (PCA) by the Reserve Bank of India on a few public sector banks (PSBs), the Allahabad Bank being the latest one.

PCA norms allow the RBI to place certain restrictions like halting branch expansion, limiting the bank’s lending limit to a particular entity or sector, stopping dividend payment, restructuring operations, superseding the bank’s board among others.

Most recently, the RBI has put Allahabad Bank under prompt corrective action framework post an on-site inspection of NPAs and negative return of assets for the fiscal 2016-17. RBI has revealed high net NPAs and negative return on assets for two consecutive years. RBI has already initiated similar action against other public sector banks including IDBI Bank, Indian Overseas Bank, Central Bank of India, Bank of Maharashtra, Dena Bank, United Bank of India, Corporation Bank, Oriental Bank of Commerce, Bank of India and Uco Bank.

Earlier in April last year, RBI had issued a new set of rules enabling provisions under the revised PCA framework with a clause that if the banks do not show improvement then these could be either merged or taken over by other bank. “Hence, this is not exaggeration of fact to say that invoking of PCA is nothing but an initiative towards the privatisation or merger of public sector banks.

IDBI Bank was the first to be put under PCA in May 2017 and we have seen no improvement in the overall performance of IDBI Bank since then and it substantiates the fact that the same will be the outcome of all other banks brought under the PCA subsequently,” D T Franco, General Secretary of AIBOC, informed The Hitavada through a press note issued here.