In view of high non-performing assets (NPAs), the Reserve Bank of India (RBI) last month had initiated prompt corrective action (PCA) against Dena Bank, restricting the lender from giving fresh credit and conducting new hirings.
"We regret that RBI has made a virtual embargo on any lending in Dena Bank. Chocking the bank's lending operations will further deteriorate its health," AIBEA general secretary CH Venkatachalam said in a letter dated June 10 addressed to the RBI governor.
"The step has created undue panic in the minds of the bank's customers and employees," he added.
The letter said Dena Bank, though not a very big bank in terms of size and business volume, has been playing a very effective role in economic development especially in the main geographical areas of its operations.
"We urge upon you to re-examine and rescind this embargo," the letter read.
Gross NPAs of the bank hit a high of 22.4 per cent of the gross advances as on March 31, 2018, from 16.27 per cent as on March 31, 2017.
In value terms, the gross NPAs or bad loans rose to Rs 16,361.44 crore from Rs 12,618.73 crore.
Net NPAs were also up at 11.95 per cent (Rs 7,838.78 crore) from 10.66 per cent (Rs 7,735.12 crore).
The RBI tightened its PCA framework last April to turn around lenders with weak financial metrics, and since then 11 banks have been moved to PCA, which involves curbs such as stopping branch expansion, halting dividend payments, limiting loan limits, among others.
Besides Dena Bank, other lenders in the RBI's watchlist are 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.
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