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RBI lifts Central Bank of India out of PCA
Central Bank of India is last bank to exit RBI’s PCA list as it improves in various parameters; agrees to comply with norms of minimum regulatory capital, net NPA and leverage ratio on ongoing basis.
Central Bank of India is last bank to exit RBI’s PCA list as it improves in various parameters; agrees to comply with norms of minimum regulatory capital, net NPA and leverage ratio on ongoing basis.
The Reserve Bank of India (RBI) has removed state-owned Central Bank of India from the prompt corrective action (PCA) restrictions following improvement in various parameters.
Central Bank of India, which was subject to strict lending curbs since June 2017, has given a written commitment to the RBI that it will comply with the minimum capital norms.
It is the last bank to exit RBI's PCA list. Of the three state-owned lenders under the RBI's PCA framework, Indian Overseas Bank and UCO Bank were removed from the watchlist in September 2021.
Central Bank of India was put under the PCA framework in June 2017 due to its high net non-performing assets (NPAs) and low return on assets (RoA).
The performance of Central Bank of India was reviewed by the board for financial supervision of RBI. The regulator said that as per the assessed figures of the bank for the year ended 31 March 2022, it is not in the breach of the PCA parameters.
The bank, RBI said, has provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis. It has also apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.
"Taking all the above into consideration, it has been decided that Central Bank of India is taken out of the PCA restrictions subject to certain conditions and continuous monitoring," RBI said.
PCA is triggered when banks breach certain regulatory requirements such as RoA, minimum capital and quantum of NPAs.
Introduced in December 2002, the PCA framework is a structured early intervention mechanism along the lines of the Federal Deposit Insurance Corp.’s (FDIC) PCA framework. These regulations were later revised in April 2017.
Central Bank of India reported a 14.2% rise in net profit to Rs 234.78 crore in the first quarter ended June this fiscal compared to Rs 205.58 crore a year ago.
The bank's gross NPA fell to 14.9% of the gross advances as against 15.92% in the earlier-year quarter. Net NPAs too fell to 3.93% from 5.09%.
