Shares of the Central Bank of India jumped 3% to ₹18.55 on the BSE during Monday's intraday trade after reports showed that the bank may see an exit from the RBI's prompt corrective action (PCA) framework. Currently, the central bank of India is the only public sector lender under the PCA lens.
The bank has already made a representation to the RBI based on the improvement in financial parameters on a sustained basis for the past five quarters, PTI reported, quoting sources.
According to sources, the RBI is looking at the bank's request and may take a view on this soon based on quantitative and qualitative parameters.
Central Bank of India was put under the PCA framework in June 2017 for a negative return on assets and a higher ratio of bad loans.
However, the RBI modified the PCA framework guidelines. The RBI excluded the parameter of return on assets from the list of triggers. According to the RBI’s revised circular on PCA, capital, asset quality, and leverage will be the parameters used to identify lenders weak enough to enter PCA.
Meanwhile, Indian Overseas Bank and UCO Bank were dropped from the PCA framework in September 2021.
Central Bank of India posted a 14.20 per cent year-on-year surge in net profit at ₹234.8 crore for the first quarter of the financial year as against ₹205.6 crore in the corresponding quarter of the preceding fiscal. However, when compared to the previous quarter, profit was down by 24.3 percent from ₹310.31 crore in the March 2022 quarter.
Total income during April-June 2022-23 rose only marginally to ₹6,357.5 crore from ₹6,245.5 crore in the same quarter of the previous fiscal year.
The bank's bad loan proportions remained high, but fell to 14.90 per cent of the gross advances by the end of June 30, 2022, as compared to 15.92 per cent in the year-ago period.
Net NPAs were down 3.93 per cent to ₹6,784.70 crore, from ₹7,904.03 crore. while the gross NPA ratio fell slightly to 14.90% from 15.92%.
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