RBI Imposes Restrictions on IDBI

2019 ias preliminary exam test series

The Reserve Bank of India (RBI) has imposed sanctions on IDBI Bank.

IDBI Bank is the first lender to be sanctioned by the RBI after the central bank recently revised its prompt corrective action framework.

Sanctions are imposed if a bank breaches a certain level of net non-performing assets (NPA), Return on Assets (RoA) and capital adequacy ratio.

RBI had initiated prompt corrective action in view of high net non-performing assets (NPA) and negative Return on Assets of IDBI.

According to RBI, IDBI Bank had breached the risk threshold 2 following which mandatory sanctions were imposed.

Restrictions on dividend distribution, domestic and overseas branch expansion, higher provisioning, are part of mandatory restrictions.

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