Situation to improve from next year, says bad-debt banks

New Delhi, June 26: Representatives from the 11 public sector banks, which are under RBI scanner for mounting bad loans on Tuesday, assured a parliamentary panel that “things would start looking up from next year” and by 2020, they would be able to come out of the austerity regime imposed by the central bank on them, sources said.

The Parliamentary Committee on Finance headed by senior Congress leader M. Verappa Moily in its meeting held on Tuesday heard out 11 banks — IDBI Bank, Allahabad Bank, Bank of India, Oriental Bank of Commerce, UCO Bank, Central Bank of India, Indian Overseas Bank, Dena Bank, Bank of Maharashtra, United Bank of India and Corporation Bank.

One of the concerns discussed during the meeting was the “stagnation” in the lending process as these banks “are not able to lend money”, resulting in “no income” to them, according to sources.

It also emerged that there was a “lot of fear” among the bankers of institutions like the Comptroller and Auditor General (CAG), Central Bureau of Investigation (CBI), Enforcement Directorate (ED) etc and bank officials are shunning action.

The Reserve Bank of India (RBI) has imposed the Prompt Corrective Action (PCA) framework on banks reeling under bad-debt under which banks face restrictions on distributing dividends and remitting profits. Besides, there are restrictions on expanding their branch networks and remuneration of directors.

The parliamentary panel also desires that RBI Governor Urjit Patel should appear before it “at least twice a year if not more” to brief the Committee on the state of economy, a source said. (IANS)