To put a check on the deteriorating financial health of banks in the country, Union Minister of Finance Piyush Goyal has placed 11 Public Sector Banks (PSBs) under the ‘Prompt Corrective Action’ framework by the Reserve Bank of India (RBI).
Under the Prompt Corrective Action, banks are restricted from distributing dividends and remitting profits. The owner may be required to inculcate capital into the lender.
Apart from this, the lenders are also restricted from expanding their branch networks and directed to maintain higher provisions. The management compensation and fees offered to the directors are also capped.
Earlier this week, Goyal was given the charge of the finance ministry until Arun Jaitley joins back after recovering from his kidney ailment.
“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,” said Goyal after the meeting.
The 11 PSBs included 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.