Indian central bank takes 3 more banks off corrective action list (updated)

Dhanlaxmi Bank

26/02/2019 14:37

* Lifts lending curbs on three banks
    * Follows capital injection, increased loan-loss provisions
    * RBI to monitor these banks' performance closely

 (Updates to add details, background)
    By Suvashree Choudhury and Chris Thomas
    MUMBAI/BENGALURU, Feb 26 (Reuters) - The Reserve Bank of
India lifted regulatory constraints on three banks on Tuesday
after they received a capital injection from the federal
government.
    The RBI had imposed lending curbs on 11 state banks over the
past few years after their capital ratios fell below minimum
requirements and bad loans surged. 
    Last month, the central bank removed three of these banks
from its so-called prompt corrective action (PCA) list and has
now removed three more.  urn:newsml:reuters.com:*:nL3N1ZV5BZ
    The three banks are state-controlled Allahabad Bank
 ALBK.NS  and Corporation Bank  CRBK.NS  and privately held
Dhanlaxmi Bank  DNBK.NS .
    The two state banks were taken off the list by the RBI under
its new Governor Shaktikanta Das following increased capital
ratios and loan-loss provisioning. 
    "This has shored up their capital funds and also increased
their loan loss provision to ensure that the PCA parameters were
complied with," the RBI said referring to the government's
latest capital injection.
    The RBI said the banks had made structural and systemic
improvements to maintain these numbers. 
    The RBI took Dhanlaxmi Bank off the list because it was not
in breach of any of the risk thresholds.
    The government said last week, it would inject 482.39
billion rupees ($6.78 billion) into 12 state lenders as part of
its recapitalisation programme.  urn:newsml:reuters.com:*:nFWN20F0HK
    "RBI will continuously monitor the performance of these
banks under various parameters," the RBI said.
    There are 21 publicly listed state-run banks in India that
provide about two-third of total loans. With nearly half of them
under a PCA plan and the rest cautious due to a record $150
billion in bad debt, the government has been keen to relax the
curbs to boost their ability to lend.

($1 = 71.1660 Indian rupees)

 (Reporting by Chris Thomas in Bengaluru; Editing by Subhranshu
Sahu and Jane Merriman)
 ((chris.thomas@thomsonreuters.com; +91-80-6749-8695; Reuters
Messaging: chris.thomas.thomsonreuters.com@reuters.net))