The Reserve Bank of India (RBI) on Tuesday said it has decided to take out state-owned Central Bank of India from the prompt corrective action (PCA) restrictions, subject to certain conditions and continuous monitoring. 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).
“The performance of the Central Bank of India, currently under the prompt corrective action framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per the assessed figures of the bank for the year ended March 31, 2022, the bank is not in the breach of the PCA parameters,” the RBI said in a notification on Tuesday.
It added that 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 and has 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,” the central bank said.
PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital and quantum of the non-performing assets including on lending, management compensation and directors’ fees.
In the first quarter ended June 2022, Central Bank of India reported a 14.2 per cent rise in net profit to Rs 234.78 crore as compared with Rs 205.58 crore in the same quarter a year ago.
In the latest quarter, the bank’s gross NPA fell to 14.9 per cent of the gross advances as compared to 15.92 per cent in the year-ago period. Net NPAs too declined to 3.93 per cent from 5.09 per cent in the first quarter of the previous year.
Out of the three state-owned lenders under the RBI’s PCA restrictions, UCO Bank and Indian Overseas Bank were already removed from the framework in September 2021.