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RBI removes UCO Bank out of PCA framework; bank vows to comply with key norms

RBI removes UCO Bank out of PCA framework; bank vows to comply with key norms

UCO Bank has apprised the RBI of the structural and systemic improvements put in place by the bank, which it says will help it in continuing to meet the key norms

UCO Bank's trimmed its gross non-performing assets significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020. Photo: Reuters UCO Bank's trimmed its gross non-performing assets significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020. Photo: Reuters

The Reserve Bank on Wednesday said it has removed UCO Bank from the PCA (prompt corrective action) restrictions framework, subject to certain conditions and continuous monitoring. This means UCO Bank will no longer face strict lending restrictions that were put in place by the RBI in May 2017.

The central bank today said the performance of UCO Bank was reviewed by the Board for Financial Supervision, which found the bank is not in breach of the PCA parameters. "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," the RBI said in a statement.

UCO Bank has also apprised the RBI of the structural and systemic improvements put in place by the bank. This, as per the bank, will help it in continuing to meet these commitments.

After the removal of UCO Bank, only two banks, Indian Overseas Bank and Central Bank of India, remain under RBI's PCA framework. The state-owned UCO Bank had posted over a four-fold jump in its net profit to Rs 101.81 crore for the first quarter ended June 30, as its bad loans fell significantly.

The Kolkata-headquartered lender trimmed its gross non-performing assets (NPAs or bad loans) significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020. In value terms, the gross NPAs fell to Rs 11,321.76 crore from Rs 16,576.43 crore.

RBI Governor Shaktikanta Das last month had said the RBI keeps reviewing the position of public sector banks that are under its PCA framework and will take a call on withdrawal only if it is a "fit case". In March this year, RBI had removed IDBI Bank from the PCA framework, which was imposed in May 2017.

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