scorecardresearchCentral Bank of India: RBI removes the bank from PCA watchlist

Central Bank of India: RBI removes the bank from PCA watchlist

Updated: 21 Sep 2022, 08:14 AM IST
TL;DR.

In a statement, the RBI said the performance of Central Bank of India was reviewed by the Board for Financial Supervision and it was noted that as per the assessed figures for the year ended March 31, 2022, the bank was not in breach of the PCA parameters.

Hyderabad, Sept 19 (ANI): Central Bank of India (CBI) employees stage a demonstration at the CBI Zonal Office against the closure of 600 branches of the bank, in Hyderabad on Monday. (ANI Photo)

Hyderabad, Sept 19 (ANI): Central Bank of India (CBI) employees stage a demonstration at the CBI Zonal Office against the closure of 600 branches of the bank, in Hyderabad on Monday. (ANI Photo)

(PTI) The Reserve Bank on Tuesday said Central Bank of India has been removed from the Prompt Corrective Action Framework (PCAF) watchlist following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.

Of the three state-owned lenders under the RBI's PCA framework, Indian Overseas Bank and UCO Bank were removed from the watchlist in September 2021.

Central Bank of India was put under the PCA framework in June 2017 due to its high net non-performing assets (NPAs) and low Return on Assets.

In a statement, the RBI said the performance of Central Bank of India was reviewed by the Board for Financial Supervision and it was noted that as per the assessed figures for the year ended March 31, 2022, the bank was not in breach of the PCA parameters.

"...it has been decided that Central Bank of India is taken out of the PCA restrictions subject to certain conditions and continuous monitoring," it said.

The lender 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. It 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.

PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital and quantum of non-performing assets.

The restrictions disable banks in several ways from lending freely and force them to operate under a restrictive environment that turns out to be a hurdle to growth.

Central Bank of India reported a 14.2 per cent rise in net profit to 234.78 crore in the first quarter ended June this fiscal as compared to 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. 

First Published: 21 Sep 2022, 08:14 AM IST