N PA, P C A, etc., ofBanks & Implications

Abstract

The Objective of PCA is to facilitate the identified banks brought under this framework to take corrective measures, including thosepreseribedBr the RBIin a time bound manner so as to restore thefmancial strength or for that matter the breached threshold parameters' limits. It is estimated that the out of the aggregate loan amount ofRs 70 lakhs core, the StressedAssets portfolio including those under restructure mode, is aroundRs I3 lakhs core and that nearly halfofit, approximately Rs 7 lakhs core (As goodasnearly
I0% of the total portfolio), are under Bad Loan category, with very remote chance of recovery.

Once taken into the PCAframework, restrictions on Dividend declaration, opening new branches, hiring, giving loans to companies with below Investment Grade, etc are duly applicable. Further, though the PCA
framework would entail restrictions on risky advances and unsecured exposures, the regularlending activities, such as, Retail Loans, Agricultural loans, rated corporates, small /medium enterprises, etc., would definitely
continue, ofcourse without losingfoeuson the quality andviability aspects.

When there are TRAI & IRDA for Telecom companies and Insurance companies, why not introduce I B R A -Indian Banking Regulatory Authority, which will have a supervision and control over banks,
presently done by RBL which canfocus on general economic aspects only.