Three more banks out of Prompt Corrective Action framework

This leaves five more banks, namely United Bank of India, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank (in the process of merger) under PCA

Published: 27th February 2019 07:46 AM  |   Last Updated: 27th February 2019 07:46 AM   |  A+A-

Commuters walk past a bank sign along a road in New Delhi (Photo | Reuters)

Image used for representation.

By Express News Service

MUMBAI: Two more Public Sector Banks (PSB) — Allahabad Bank and Corporation Bank — would be out of the stifling Prompt Corrective Action (PCA) framework of the Reserve Bank of India, following the recent additional capital infusion by the government. Dhanlaxmi Bank, the only private sector bank under PCA, would also be out of it, according to an RBI notification.

The Board for Financial Supervision (BFS), at its meeting on Tuesday, reviewed the performance of the banks and took into account Rs 6,896 crore capital that Allahabad Bank received and Rs 9,086 crore Corporation Bank got. “This has shored up their capital funds and also increased their loan loss provision to ensure that the PCA parameters were complied with,” RBI said.

“Accordingly, based on the principles adopted by the BFS in its meeting dated January 31, 2019, it was decided in the meeting held on February 26, 2019, that Allahabad Bank and Corporation Bank be taken out of the PCA framework, subject to certain conditions and continuous monitoring,” the notification said. As far as Dhanlaxmi Bank was concerned, the RBI said the bank was found to be not breaching any of the risk thresholds of the PCA framework.

RBI said that it will continuously monitor the performance of these banks under various parameters. Bank of India, Bank of Maharashtra and Oriental Bank of Commerce were taken out of PCA framework on January 31.

Allahabad Bank’s net NPAs had declined from 8.97 per cent in December 2017 to 7.70 per cent in December 2018, and Corporation Bank’s CRAR had improved from 10 per cent to 11.1 per cent and provision coverage ratio improved from 59.5 per cent to 66.1 per cent in the same period.

This leaves five more banks, namely United Bank of India, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank (in the process of merger) under PCA. 

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