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RBI takes Central Bank of India out of PCA restrictions

RBI takes Central Bank of India out of PCA restrictions

The Central Bank of India 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. The bank was put under the PCA framework in June 2017 due to its low return on assets and high net non-performing assets (NPAs).

RBI revised the PCA framework for Scheduled Commercial Banks (SCBs), with changes being effective from January 1, 2022.  (Photo: Reuters) RBI revised the PCA framework for Scheduled Commercial Banks (SCBs), with changes being effective from January 1, 2022.  (Photo: Reuters)

The  Reserve Bank of India on Tuesday informed that it has taken the Central Bank of India out of Prompt corrective action (PCA) restrictions. The performance of the bank was reviewed by the Board for Financial Supervision.


The lender reported 14.2 per cent rise in profit to Rs 234.78 crore this year from Rs 205.58 crore recorded last year. The gross Non-Performing Assets (NPAs) fell from 15.92 per cent to 14.9 percent in the latest quarter.


The bank 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.
 
The RBI took into consideration the performance along with the written commitment of the bank and decided to take the Central Bank of India out of the PCA restrictions subject to certain conditions and continuous monitoring.  

PCA is enforced by RBI when banks breach certain regulatory requirements such as return on asset, minimum capital, and quantum of non-performing assets. Banks under PCA face restrictions like dividend distribution, branch expansion, and management compensation or may require promoters to infuse capital in the bank.

The bank regulator had three state-owned banks under its PCA framework. Indian Overseas Bank and UCO Bank were removed from the watchlist in 2021. 

RBI had revised the PCA framework for Scheduled Commercial Banks (SCBs), with changes being effective from January 1, 2022. 

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