The Reserve Bank of India on Saturday initiated prompt corrective action against public sector lender Dena Bank, restricting it from giving fresh credit and new hiring, PTI reported. The move comes a day after the public sector lender reported a further widening of its loss to Rs 1,225 crore in the quarter that ended on March 31 due to mounting bad loans and the subsequent higher provisioning.
The bank reported gross bad loans hitting a high of 22.4% of the gross advances as on March 31, from 16.27% as of the corresponding quarter in 2017. The bad loans from Rs 12,618 crore to Rs 16,361 crore.
In January, public sector Allahabad Bank said the RBI had put it under prompt corrective action framework due to high non-performing assets and negative return of assets for fiscal 2016-’17. “The action will contribute to the overall improvement in risk management, asset quality, profitability, efficiency of the bank,” the lender had said.
In April, the central bank imposed a fine of Rs 3 crore on IDBI Bank for failing to comply with norms related to reporting of bad loans. IDBI Bank disclosed fraudulent loans worth Rs 772 crore issued from five of its branches in Telangana and Andhra Pradesh.