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May 12, 2018

RBI bars Dena Bank from Hiring Staff & Lending

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The Reserve Bank of India (RBI) has barred the state run lender Dena Bank from extending fresh credit in view of deteriorating financial health due to mounting Non-Performing Assets (NPAs). In addition, the lender has also been barred from recruiting staff.

This means the bank can disburse loans for the credit facilities already sanctioned, but cannot sanction fresh loans.

RBI had in May last year initiated prompt corrective action against Dena Bank and imposed certain restrictions, in view of high net NPA and negative Return on Assets.

Dena Bank today reported a net loss of Rs 1,225 crore for the fourth quarter ended March 31, 2018. This loss was much wider than the net loss of Rs 575 crore recorded in the same quarter last year.

Though several banks are under the PCA framework currently, Dena Bank is the first lender to have fresh lending curbed. RBI may decide to lift the restrictions in case the bank improves profitability and reduces bad loans.

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