The Reserve Bank of India (RBI) has become more active in supervising banks since the Modi government arrived in comparison to the past governments, says Finance Minister Piyush Goyal. “I must place on record that we are very appreciative of the fact that finally the Reserve Bank of India (RBI), since the Modi government came in, is ensuring proper banking supervision, is taking action against defaulters, something which I believe under previous governments was not given the kind of serious attention that it deserved,” Financial Express reported citing Piyush Goyal.
One of the major decisions that the RBI has taken in the recent months to help the debt-ridden public sector banks is to place 11 of these banks under prompt corrective action (PCA) framework. Under PCA, the banks face restrictions on distributing dividends and also remitting profits. These public sector lenders are also furthermore stopped from expanding their branch networks. They also need to maintain higher provisions. Management compensation and directors’ fees are also capped. The central bank is diligently supervising the entire problem of bad loans in order to ensure orderly growth of banking industry, Piyush Goyal had said yesterday.
Finance Minister Piyush Goyal had also put onus of rising bad loan problem on the previous government and said that the reckless lending initiated under the last UPA regime resulted in banking sector getting financially stressed.
Piyush Goyal, who is holding the additional charge of Finance Minister in absence of Arun Jaitley, yesterday attended the bankers meet at Department of Financial Services, where he took stock of banks under Prompt Corrective Action (PCA).
The government may have to dole out more funds for the 11 public lenders in the current fiscal than estimated earlier as part of its unprecedented Rs 2.1-lakh-crore capital infusion plan over two years, as massive provisioning requirements to cover for bad assets have taken a toll on their capital base, FE reported.
The chiefs of 11 public sector banks which are placed under the RBI’s prompt corrective action (PCA) framework met him on Thursday.