The Reserve Bank of lndia placed ailing public sector lender Dena Bank under prompt corrective action (PCA), in view of high net non-performing assets and negative return on assets (RoA).
PCA would mean taking mandatory corrective actions such as raising capital levels, restricting dividend payments and curbing branch expansions, among others. In extreme cases, the bank might have to put restrictions on management compensation to come out of the PCA framework. Other ailing public sector banks already under PCA include Mumbai-based IDBI Bank and Chennai-based Indian Overseas Bank (IOB). Dena Bank said in a notice to the BSE this action would not have any material impact on its performance. The action, it said, would “contribute to improve” the internal controls of the bank and improvement in its activities.
“The RBI has initiated ‘prompt corrective action’ for Dena Bank in view of high net NPA and negative ROA (return on asset),” the state-owned bank said in the filing. Dena Bank’s net loss widened to Rs 575 crore in the fourth quarter ended March 2017 from Rs 326 crore in Q4 of the previous financial year, with net interest income declining and provisions for bad loans increasing. Its net loss for the year ended March 2017 declined to Rs 836 crore from Rs 935 crore in the year ended March 2016.