Letter to BS: Govt must intervene to push RBI to revisit norms of PCA

Reserve Bank of India | File Photo
This refers to “Govt may take up easing PCA norms with RBI today” (October 23). The banks that are under prompt corrective action (PCA) are losing their health and credibility as they are in the bed without medication. Further, they are also losing creditworthy customers because of their inability to cater to the credit requirements. This is adversely affecting resource mobilisation. 

The deployment of resources through investment and lending are key functions restricting or preventing banks from lending. While the aim is to make the weak banks strong, it is imperative to support with adequate capital and allow them to function as a bank. Resolution or realisation of the stressed assets alone will not accelerate performance and improve the ratio of stressed assets. 

While the present heap of non-performing assets is the result of reckless lending and other economic factors, any expansion of the loan books of the banks must be under the strict oversight of the banking regulator. The government must intervene to push the Reserve Bank of India to revisit the norms of PCA to turn weak banks to strong ones. 

VSK Pillai Bengaluru
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