NEW DELHI: Finance Minister Piyush Goyal on Thursday promised to extend help to strengthen the 11 public sector banks placed under the Prompt Corrective Action (PCA) framework of the Reserve Bank of India to check their deteriorating financial health.
“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 possible,” Piyush Goyal said at his first interaction with bankers after he was given temporary charge of the Finance and Corporate Affairs Ministries until Arun Jaitley recovers from a kidney transplant operation.
Goyal added that the government will prepare an action agenda on a case-by-case basis, with help of Department of Financial Services, to resolve the issues.
According to the minister, the meeting was "very useful" to understand what has transpired over the last 12-13 years in the banking system and the heads of the 11 banks shared "some very good ideas" in the meeting to resolve the crisis.
“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, added Goyal.
The NPAs of PSBs have gone up substantially forcing RBI to put them under PCA. Currently half the total number of PSBs are under PCA framework, which includes 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.
Going forward, the bad loan may go up further as many banks still hold large volumes of restructured loans, an instrument which was discontinued by the RBI in February this year.
“I am extremely confident that the public sector banks will be able to overcome these legacy issues in a very short period of time,” Goyal added.