The RBI machinery was in action for most of the week, partly due to rumours being circulated on WhatsApp and social media claiming closure of 15 banks. The central bank, in its second such clarification this year, has reiterated that any bank placed under Prompt Corrective Action (PCA) framework will not close down and operations directly involving the general public remain unaffected.

RBI action on banks

RBI also took some major regulatory action on two public sector lenders – Bank of India and United Bank of India – under the prompt correction action (PCA) framework due to high stress levels owing to the bank’s high bad loans.

For Bank of India, restrictions were imposed on issuing of fresh loans and dividend distribution in view of high net NPA, insufficient CET1 Capital and negative ROA (return on asset) for two consequent years.

For United Bank, the action pointed to focus on profit retention, capital augmentation, provision coverage, diversification of credit portfolio, rationalisation of expansion and cost control.

HDFC Bank to raise Rs 24,000 crore

In some good capital news for banks, HDFC Bank approved fund raising up to Rs 24,000 crore through issue of shares. Of the total capital, Rs 8,500 crore will be raised through a preferential issue of shares with a face value of Rs 2 each to parent HDFC - Housing Development Finance Corporation, which aims to retain its shareholding in the bank at 21 percent.

In some distressed assets news, Kotak Mahindra Bank , India's fourth largest private lender, will look at buying mid-sized assets of the companies undergoing insolvency proceedings but the pricing is yet to be at acceptable levels, said Dipak Gupta, Joint Managing Director of Kotak Bank to Moneycontrol in an interview.

NPAs to rise

In the middle of the week, the RBI released its Financial Stability Report claiming risks to the banking system showing likely rise in bad loans till March and September 2018.

Kotak ATM heist

However, the week had begun on a negative note for Kotak Bank as one of its ATMs in Mulund East, Mumbai, witnessed a breach claiming nearly Rs 15 lakh money fraudulently being taken from around 40 people’s bank accounts hacking their debit cards used by customers.

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Owing to bank frauds, the consumer complaints at the central bank’s Banking Ombudsman increased 27.4 percent to 1.3 lakh, with each complaint costing nearly Rs 4,000. The highest complaints came from from New Delhi and Mumbai, said the central bank’s annual report of the Banking Ombudsman Scheme.

Banks lost a whopping Rs 16,789 crore on account of frauds in the last fiscal.

Monetary Policy Minutes

The banking regulator also released minutes of the monetary policy , which was announced on December 6, where RBI Governor Urjit Patel highlighted the continued risks to inflation and hence hinting at a rate hike cycle, amid many uncertainties going forward.