Business Mantra News
Recently the Country’s Financial Sector was stunned after the detection of Punjab National Bank’s (PNB) Rs.11300 Croresfraud, subsequently nearing to Rs.14000 Crores, ratings of another six Public Sector Banks has been downgraded by one of the India’s leading Rating Agency, Brickwork. The Brickwork Rating Agency has downgraded six PSBs namely Allahabad Bank, Bank of India, Central Bank of India, Corporation Bank, Union Bank of India and United Bank of India due to certain parameters which suggest that their popularity and strength has come down.
The significant reasons for down grading of the above mentioned banks are:
- Growing Non Performing Assets (NPAs)
- Recovery of NPAs is not up to the mark and debt resolution is also being delayed by the high profile debtors who filed litigations using delaying tactics and unwilling to accept defaults in loans.
- As a result of very high ratio of NPAs, Asset Quality has also come down.
- Non-Interest income of these banks has also been observed to be negatively growing from year to year basis.
Moreover, the Rating Agency has also reported negative stance of UCO Bank, Andhra Bank, Indian Overseas Bank and Punjab and Sind Bank, which means that these Banks are also on the verge of negative implications.
If this trend of down rating the financial institutions continues, the health and creditability of the financial sector shall be at stake.
Financial sector is the back-bone of the healthy economy of the country. India, to become aglobal power should improve considerably.