Letter to BS: Eleven of 21 PSBs are under Prompt Corrective Action of RBI

This is with reference to the editorial “Beware of lending freeze” (May 15). Eleven of 21 public sector banks (PSBs) are under the Prompt Corrective Action (PCA) of the Reserve Bank of India (RBI). Another four or five are likely to fall under the PCA in view of their rising NPAs and not being able to meet the other concerned financial parameters.

It is time the government and the RBI sit together and decide which of these banks under PCA should stick to some kind of narrow banking that is, stick to only limited banking services like collecting deposits, providing remittance services and lockers, lending to retail and small borrowers and investing in the government securities. Infusing capital in banks that are consistently problematic is not wise (waste of tax payers’ money) and these banks cannot raise capital from the public. Selling the government stake won’t get many buyers.

It’s time to think of having say five or six reasonably strong PSBs who will provide full banking services including lending to large borrowers and the rest should provide limited banking services. 

Arun Pasricha,  New Delhi Letters can be mailed, faxed or e-mailed to: 

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