Dena Bank share price plunges 12% after RBI puts restrictions on fresh lending, hiring
Dena Bank gross NPAs hit a high of 22.4 per cent. Image source: Reuters
Dena Bank share price on Monday plunged over 12 per cent after the Reserve Bank of India restricted bank from assuming fresh credit exposure and recruitment of staff. The stock tanked as much as 12.46 per cent to Rs 18.45 on the BSE.
The RBI on Saturday initiated prompt corrective action against Dena Bank in view of high non-performing loans, restricting the bank from giving fresh credit and new hiring. The restriction came a day after the public sector lender reported widening of its net loss to Rs 1,225.42 crore in the March quarter on mounting bad loans and higher provisioning to cover them.
The net loss stood at Rs 575.26 crore in the January-March quarter of 2016-17. Sequentially, the loss widened from Rs 380.07 crore in December quarter of 2017-18.
"Reserve Bank of India, vide their letter dated May 31, 2017, has initiated Prompt Corrective Action for Dena Bank and imposed certain restrictions, in view of high Net NPA and negative RoA ( return on assets)," the bank said in a regulatory filing.
In continuation to the above, "we wish to inform that the RBI vide their letter dated May 07, 2018 (received by the Bank on May 08, 2018) has restricted the Bank from assuming fresh credit exposure and recruitment of staff," it said further.
Dena Bank said it was put up to the Board in its meeting held on May 11, 2018.
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Banks asset quality has worsened with the gross NPAs hitting a high of 22.4 per cent of the gross advances as on March 31, 2018, from 16.27 per cent as of end-March 2017. In value terms, the gross NPAs or bad loans rose to Rs 16,361.44 crore from Rs 12,618.73 crore.
Net NPAs were also up at 11.95 per cent (Rs 7,838.78 crore) from 10.66 per cent (Rs 7,735.12 crore).
Written By: ZeeBiz WebTeam
Updated: Mon, May 14, 2018
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