In the middle of last year, the government-owned lender was put under the ‘Prompt Corrective Action’ framework, meant to stop things getting worse at ailing banks. However, it is the first under this restrictive umbrella to also be told to stop all new lending.
RBI took the extra step after more bad news from Mumbai-based Dena.
It has made losses for three financial years in a row and its proportion of net non-performing assets to advances reached a new high of 11.95 per cent at end-March, from 10.66 per cent a year before. The net loss in 2017-18 surged to Rs 19.2 billion, from one of Rs 8.6 billlion a year before.
“If we do not lend, from where are we going to earn? We have to reduce assets and liabilities; if income will also dwindle, it will be difficult to meet operating expenses,” said executives.
Dena has been without a managing director and chief executive officer after Ashwani Kumar demitted office in December 2017, on finishing his term.
Ramesh Singh, senior executive director, is officiating.