Finance Minister Piyush Goyal on Thursday assured all possible help from the government to strengthen the 11 public sector banks that have been placed under the RBI's 'Prompt Corrective Action' framework to check their deteriorating financial health.
The RBI has put restrictions on the distribution of dividends, remitting of profits and giving out loans by these banks. Besides, they have been stopped from expanding their branch networks and need to maintain higher provisions. Management compensation and directors' fees are also capped. The government may have to infuse more capital into these banks.
Goyal, who was earlier this week given temporary charge of the finance ministry until Arun Jaitley recovers from the kidney transplant surgery that he has undergone, met heads of the 11 public sector banks here on Thursday.
"Over the next few days we will ensure that the central government gives every possible support to further strengthen the resolve of these banks to come out of PCA framework as quickly as is possible,'' Goyal told journalists after the meeting. The 11 banks under 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.
Goyal said the meeting was very useful to understand what has transpired over the last 12-13 years in the banking system....the 11 banks were represented at the highest level. Every one of the bankers spoke of solutions going beyond history...They are going to work through the day and meet me again late in the evening to prepare the action agenda on a case by case basis, he disclosed.
Earlier in the day, Goyal said he would endeavour to quickly put on track the banking sector, which has been marred by scandals and bad debts that threaten to have repercussions for the broader economy.