Published: Tue, May 15, 2018
Global | By Marsha Munoz

Curbs on Allahabad Bank, CEO divested of powers

Curbs on Allahabad Bank, CEO divested of powers

Last week, Allahabad Bank reported a stand-alone net loss of almost Rs 3,510 crore for the last quarter ended March of 2017-18 due to more than three-time rise in its provisions for bad loans.

Allahabad Bank on Monday said the RBI has imposed restrictions on its lending to risky assets and raising high-cost deposits in view of deteriorating financial health.

The Reserve Bank of India on Saturday initiated prompt corrective action against public sector lender Dena Bank, restricting it from giving fresh credit and new hiring, PTI reported.

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The RBI having regard to the bank's CRAR and leverage ratio position has advised certain additional actions, Allahabad Bank said. The bank posted a net profit of Rs 111.16 crore in Q4FY17, whereas net loss of Rs 1,263.79 crore was posted in Q3FY18. For the financial year 2017-18, it had recorded a net loss of Rs 1,924 crore.

It also reported that its gross non-performing assets went up to Rs 26,562.79 crore as on March 31, up by 28 per cent from Rs 20,687.83 crore a year ago.

Its net NPAs were Rs 12,229.13 crore at the end of this quarter under review, as against Rs 13,433.51 crore as on March 31, 2017.

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The bank is already under PCA (Prompt Corrective Action), where the banks face restrictions on distributing dividends and remitting profits.

The RBI has initiated similar action against other public sector banks, including IDBI Bank, Indian Overseas Bank and UCO Bank before this. Also, the previously used schemes like SDR (strategic debt restructuring) and S4A (Scheme for Sustainable Structuring of Stressed Assets) were withdrawn immediately.

"We are all expecting the economy to do better this year, investment to pick up, there are some signs that corporate results are getting better.In such a case, suddenly if you say, banks are not able to lend, it could strike us quite hard", said Sabnavis.

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As per the revised PCA guidelines released past year, if a bank enters "Risk Threshold 3", it may be a candidate for amalgamation, reconstruction or even be wound up.

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