After Reserve Bank of India governor Urjit Patel demanded more powers to oversee public sector banks (PSBs), 11 heads of the banks on Tuesday blamed central bank for banking sector woes amid mounting bad loans and increasing fraud cases.

The top officials of IDBI Bank, UCO Bank, Central Bank of India, Bank of India, Indian Overseas Bank, Dena Bank, Oriental Bank of Commerce, Bank of Maharashtra, United Bank of India, Corporation Bank and Allahabad Bank, which appeared before the parliamentary standing committee of finance, told that they were unable to give loans because of tougher RBI norms.

The PSB chiefs told the panel headed by veteran Congress leader M Veerappa Moily that they will come out of RBI's Prompt Corrective Action (PCA) scheme in two years.

Under the PCA, banks face restrictions on distributing dividends and remitting profits. The owner may be asked to infuse capital into the lender. Besides, the lenders are stopped from expanding their branch networks and need to maintain higher provisions. Management compensation and directors fees are also capped.

Many Members of Parliament (MP) were not satisfied with the replies of PSB heads as rising number of frauds has become a serious cause of concern for the entire banking industry.

The next meeting of parliamentary panel, which is looking into 'Banking Sector in India- Issues, Challenges and the Way Forward, including Non- Performing Assets/ Stressed Assets in Banks/Financial Institutions,' will be held on July 3.

The banking sector is grappling with rising non-performing assets (NPAs), which touched Rs 8.99 lakh crore or 10.11 percent of total advances at December-end 2017. Of the total gross NPAs, the public sector banks accounted for Rs 7.77 lakh crore.

The number of frauds reported by banks increased from 4,693 in fiscal 2015-16 to 5,904 in 2017-18. The fraud amount at end-March 2018 was Rs 32,361.27 crore, up from Rs 18,698.8 crore at the end of 2015-16.

First Published:Jun 26, 2018 4:12 PM IST