The All India Bank Officers’ Confederation (AIBOC) has questioned the imposition of the norms of Prompt Corrective Action (PCA) by Reserve Bank of India (RBI) on a few public sector banks.

Ekanath Baliga, Vice-President of AIBOC, said PCA norms allow the RBI to place certain restrictions like halting branch expansion, limiting the bank's lending limit to a particular entity or sector, stopping dividend payment, restructuring operations, and superseding the bank’s board, among others.

RBI has initiated PCA against IDBI Bank, Indian Overseas Bank, Central Bank of India, Bank of Maharashtra, Dena Bank, United Bank of India, Corporation Bank, Oriental Bank of Commerce, Bank of India, UCO Bank, and Allahabad Bank.

He said the RBI had issued a new set of enabling provisions under the revised PCA framework during April last year with a clause that if the banks do not show improvement then these could be either merged or taken over by other banks.

“Hence, this is not exaggeration of fact to say that invoking of PCA is nothing but an initiative towards privatisation or merger of public sector banks,” he said in a press release here.

Most of the loans that have become NPAs are large advances sanctioned at the board-level consisting of RBI representatives and members nominated by the Central Government. Employees and officers of these banks had little to do in this regard, he said. Instead of looking at the miserable plight of the NPA position of these banks, the government would do better by bringing in a specific and stringent law that empowers the banks to initiate legal action against wilful defaulters, Baliga said.

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