INSUBCONTINENT EXCLUSIVE:
Eleven state-owned banks will have to wait for about a month before knowing which of them will have lending curbs eased after a Reserve Bank
of India (RBI) panel reviews their December quarter results, an official with direct knowledge of matter told Reuters on Thursday
The government of Prime Minister Narendra Modi has been pressuring central bank to ease curbs on at least some of banks in an attempt to
boost lending and economy ahead of a general election due to be held by May.The RBI's Board for Financial Supervision (BFS), chaired by
central bank's new Governor Shaktikanta Das, met on Thursday and looked at estimates for financial performance of banks in October-December
quarter.Based on those estimates, about three to four of these banks - which in recent years were targeted by RBI for tough lending
restrictions because of a surge in bad loans, capital depletion and mounting losses - are likely to have those curbs eased, official
said.However, panel will wait to examine audited results of banks, before making a final decision, source said
The results are due by end of month but it is unclear when next panel meeting will be.The government has infused capital in some of banks to
help them to adhere to central bank's capital ratios.However, panel would like to be sure which of banks will be able to maintain minimum
capital ratios under scenarios such as a delay in recovery of bad loans in bankruptcy cases, official said."Every bank has given an estimate
of their recovery plan to RBI
We need to be sure that banks are following that plan and should be compliant with PCA (Prompt Corrective Action) norms by March end on
capital and bad loan parameters."There are 21 listed state-run banks in country that provide about two-third of total loans in economy
With nearly half of them under a PCA plan and rest cautious due to a record $150 billion in bad debt, government is keen curbs be relaxed to
boost their ability to lend.After losing power in three key states last month, PM Modi's government is anxious to woo voters especially
farmers and small businesses that were hit hard by a high-value currency note ban in late 2016 and introduction of a goods and services tax
in mid-2017.However, RBI was reluctant to ease curbs, triggering a bitter public war of words between government and central bank that ended
with former governor Urjit Patel resigning last month, citing personal reasons.
