RBI takes Central Bank of India out of PCA – Moneycontrol

The Reserve Bank of India, on September 20, said it has taken out the state-run Central Bank of India from the so-called Prompt Corrective Action (PCA) framework, subject to certain conditions and continuous monitoring.

“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.

Further, the bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, net non-performing asset and leverage ratio on an ongoing basis the regulator said.

Central Bank of India has also 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, said the RBI.

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

A bank under PCA faces RBI restrictions on dividend distribution, branch expansion, management compensation or requiring promoters to infuse capital. As per the revised guidelines, capital, asset quality and leverage are the key areas for monitoring.

Central Bank of India reported a 14.2 percent rise in net profit to Rs 234.78 crore in the April-June quarter, as compared to Rs 205.58 crore in the same quarter of the previous financial year. Gross NPA ratio fell to 14.9 percent of the gross advances as compared to 15.92 percent in the year-ago period. Net NPAs also fell to 3.93 percent from 5.09 per cent in the first quarter of the previous financial year.