The panel had in its report submitted to the Reserve Bank governor observed that the Allahabad Bank, Central Bank of India, Indian Overseas Bank, Punjab and Sindh Bank, Union Bank of India and Vijaya Bank were vulnerable to sudden changes that could arise in the external environment and run a high risk of slipping into the category of weak banks.

The seven parameters for measuring effeiciency by the Verma panel are: 9 per cent capital adequacy ratio, 0.50 per cent coverage ratio, return on assets, net interest margins, ratio of operating profit to average working funds, ratio of cost to income and ratio of staff cost to net interest income plus all other income.

"We accept the these finding as they are based on the balance sheet. We will have to gear up to face the challenges," chairman and managing director of Central Bank of India KC Chowdhury said. Punjab and Sindh Bank has decided to continue its turnaround excercise and has now opted to go for a intitial public offering (IPO) at par to enhance capital adequacy requirements.

According to Punjab & Sind Bank CMD SS Kohli, the bank has been taking steps to reduce NPA in the last three years. When he had taken over, the gross NPA was pegged 29 per cent, while today it is 16 per cent and it intends to bring it down to 15 per cent by the end of this year, he said.

Syndicate Bank, which has shown improvement in 1998-99 as it has been able to achieve a higher returm on assets, is tapping the capital market with a Rs 125 crore IPO priced at par to enhance its capital adequacy. The report has also noted that during the year the bank was able to register additional income due to changes in method of valuation of current investements and writing back of excess provisions made earlier.

Bankers said that while they are not disagreeing with the problem areas highlighted by the Verma committee they were emphatic that the banks performance in the previous two to three years had been improving and NPAs were being brought down.