Central Bank of India likely to exit RBI PCA framework soon – Times of India

New Delhi: Central Bank Of IndiaSole Public Sector Lender under reserve Bank of India‘s prompt corrective action ,PCA) framework, may soon come out of sanctions after improving its financial health. The bank has already made a representation reserve Bank of India (RBI) based on improving financial parameters on a continuous basis for the last five quarters, the sources said.
According to sources, RBI is considering the request of the bank and may consider it soon based on quantitative and qualitative parameters.
Central Bank of India reported a 14.2 per cent rise in net profit at Rs 234.78 crore for the first quarter ended June of the current financial year, as against Rs 205.58 crore in the same quarter a year ago.
In the latest quarter, the bank’s gross NPAs fell to 14.9 per cent of gross advances as compared to 15.92 per cent in the year-ago period. Net NPAs also declined to 3.93 per cent from 5.09 per cent in the first quarter of the previous year.
Out of the three PSU lenders under the supervision of RBI, Indian Overseas Bank And UCO Bank Was removed from the framework in September 2021.
Central Bank of India was placed under the PCA framework in June 2017 due to its high net non-performing assets (NPAs) and low return on assets.
PCA begins when the bank violates certain regulatory requirements such as return on assets, minimum capital and amount of non-performing assets, including borrowings, management compensation and directors’ fees.
Under the PCA, the bank faces RBI restrictions on dividend distribution, branch expansion, management compensation or the need for promoters to infuse capital.
Last year, the RBI released a revised Prompt Corrective Action (PCA) framework for banks to enable supervisory intervention at an “appropriate time” and act as a tool for effective market discipline.
As per the revised guidelines, capital, asset quality and leverage are the key areas for monitoring in the revised framework.