The Reserve Bank of India removed the Central Bank of India on September 20 from the so-called Prompt Corrective Action (PCA) framework after it showed improvement in the financial ratios including minimum regulatory capital and net non-performing assets (NNPAs).
“It was noted that as per the assessed figures of the bank for the year ended March 31, 2022, the bank is not in breach of the PCA parameters,” the RBI said in a statement.
When a bank transgresses certain regulatory thresholds regarding capital to risk weighted assets ratio (CRAR), net NPAs, and return on assets, the PCA norm, a supervisory tool, is imposed (RoA).
The RBI had imposed the PCA norms on the bank in June 2017 due to its high net NPA and negative return of assets (RoA).
RBI decided to remove the restrictions on the bank after reviewing the performance of the Central Bank of India.
The bank has given a written assurance that it will consistently adhere to the standards of minimum regulatory capital, net NPA, and leverage ratio.
In the financial year ended March 2022, the bank’s net NPA ratio stood at 3.97 per cent as compared to 10.20 per cent in the fiscal ended March 2017. In the quarter ended June 2022, its net NPA improved to 3.93 percent.
During the fiscal year ending March 31, 2021, its CRAR improved from 13.84 percent compared to 10.95 percent as on March 31, 2017. In June 2022, CRAR stood at 13.33 percent.
This is the final bank that the RBI has exempted from the PCA requirements.
After they exceeded the risk thresholds, the RBI put 11 state-run banks under the PCA framework: Allahabad Bank, United Bank, Corporation Bank, IDBI Bank, Uco Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank, and Bank of Maharashtra.
Five of the 11 lenders were subject to PCA restrictions in the quarter that ended in June 2017, five more in the quarter that ended in December 2017, and one in the quarter that ended in March 2018.
