Nine out of the eleven Public Sector banks which are currently under Reserve Bank of India (RBI) Prompt Corrective Action(PCA) have submitted a 2-year recovery plan to the government entailing stake sale in subsidiaries and reduction of corporate loan book and these banks switching certain loans with the stronger banks.
Finance Minister Piyush Goyal held detailed review meeting with PCA banks last month where he asked these 11 PSU banks to come up with the plan to strengthen finances and meet the RBI`s capital adequacy norms.
Of these, 9 banks have already submited report to the Department of Financial Services, an official said.
“The idea is clearly to reduce the number of banks. So we are not ruling out mergers but before that they (the PCA banks) should be in reasonable health,” the official said.
The 11 banks under Prompt Corrective Action (PCA) are Dena Bank, 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 and Bank of Maharashtra.
“During the Congress regime, PSU banks gave loans recklessly, which impacted their financial health. Those loans were also restructured to present a distorted picture. The present government has provided the true picture of the health of banks and is now making effort to improve their finances,” Goyal said in a tweet.
In October last year, the government had announced plans of massive capital infusion of Rs 2.11 lakh crore spread over two fiscals — 2017-18 and 2018 -19.