RBI initiates 'prompt corrective action' for Dena Bank over bad loans

The Reserve Bank of India has initiated "prompt corrective action" (PAC) for State-run Dena Bank over its high bad loans and negative return on assets, the lender said in a stock exchange filing on Friday.

The RBI issues a PAC to spur lenders to deal with bad debts, as one of the measures intended to tackle a record $150 billion bad debt that has plagued Indian banks.

Dena Bank's losses widened in the March quarter as net bad loans increased to 10.66 per cent of its net advances from 6.35 per cent a year ago, near the 12 per cent cap specified in the RBI's PAC framework.

The RBI's action will not have any "material impact on the performance of the bank", Dena Bank said in the filing.