INSUBCONTINENT EXCLUSIVE:
MUMBAI: The Reserve Bank of India (RBI) warned that absence of perceived sovereign guarantees to banks under Prompt Corrective Action would
amplify contagion risk of default in banking industry as five state-owned lenders would fall below minimum capital requirements.
For stress
It mostly assesses impact on assumption that state would back government banks
trigger bank, losses that would accrue to system would not only be because of trigger bank in consideration, but also because of five PSBs
that became a major point of contention between regulator and government
of 11 PCA banks have declined from Rs 73,500 crore to Rs 34,200 crore (3.1 per cent of total Tier-1 Capital) in past four quarters, and to
loans and low capital are barred from setting up new branches, hiring staff and giving big-ticket loans and in some cases, even advance
funds to small businesses.
