RBI Directs to Indian Overseas Bank to Take Corrective Action on NPA, Capital Erosion & Profitability

Banking Finance News News

Business Mantra : Faridabad

Net NPA of Indian Overseas Bank has increased from from 5.84% to 9.40%, whereas Gross NPA has increased from Rs.10350 Crores to Rs.16451 Crores, a jump of 60% within a year and the profitability of the Bank has declined by 95% for the same period.

Observing the above mentioned parameters and to protect solvency of the Bank, Reserve Bank of India has directed the Bank to initiate the process of corrective measures by improving internal controls and business activities by keeping strict and vigilant control on existing advances, stepping up recovery of NPAs on a faster pace and bringing quality fresh business.

Capital Adequacy Ratio of the bank is 9.75%, whereas Tier I Capital Adequacy Ratio is 6.30% (it should be minimum 7%)

Similar corrective actions were initiated against Kolkata based United Bank of India due to capital erosion and high level of NPAs in February, 2014.

Author: Lalit Virmani (Author is an Ex-Banker (Retired Executive from a Leading Nationalized Bank) presently a Finance Consultant)You may contact the author at info@businessmantranews.com

About the author