INSUBCONTINENT EXCLUSIVE:
MUMBAI: The fallout of RBI imposing prompt corrective action (PCA) rules on 11 state-run banks has been that their loan book and credit
deposit ratio has been on a rapid decline
While the combined loan book of the banks under PCA slid 11 per cent since FY2015, the credit-todeposit ratio was less than 65 per
cent.
This when CD ratios of private banks stood at nearly 90 per cent while for state-run banks that are not under PCA was more than 70 per
cent.
A Kotak Institutional Equities report showed loan base of PCA PSU banks contracted more than 5 per cent while private sector banks
grew their loan base nearly 20 per cent
if policymakers should rush into affirmative action to address the weak financial condition of PSU banks without a complete makeover of
The report said there was no reason for the government to give large amounts of capital to weak PSU banks or force consolidation among PSU
banks.
Indian banking is under severe stress with bad loans surging to Rs 10.17 lakh crore of total loans and stressed assets at nearly 15
months, fiscal challenges rule out large capital infusion and legislative and political challenges may prevent any change in the ownership
