Insta
RBI Frees Bank of India, Bank of Maharashtra ,Oriental Bank of Commerce From PCA framework
Swarajya Staff
Feb 01, 2019, 09:38 AM | Updated 09:38 AM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
The Reserve Bank of India (RBI) on Thursday announced that it is removing Bank of India and Bank of Maharashtra from its prompt corrective action plan (PCA) for state-owned banks loaded high levels of bad debt and inadequate capital, Bloombergquint reported.
The RBI also removed another state owned bank Oriental Bank of Commerce from restrictions under the PCA framework, but said it will monitor the bank closely.
PCA is regulatory systemic control imposed on the banks showing signs of weaknesses in critical areas – capital, asset quality and profitability. It will impose closer tracking of – capital to risk-weighted assets, common equity tier (CET)-I, net NPA ratios and ROA by the regulator. I
Under RBI’s PCA policy, 11 public sector banks and one private one were asked between February 2014 and January 2018 to shrink lending to all but retail customers. They also were asked to curtail branch expansion and scrap dividends.
"Bank of India and Bank of Maharashtra, which meet the regulatory norms including the Capital Conservation Buffer and have net NPAs (non performing assets) of less than 6 percent as per third quarter results, are taken out of the PCA framework," the RBI said in a statement.
The RBI's board for financial supervision chaired by governor Shaktikanta Das took the decision at its meeting on Thursday after reviewing the latest quarterly performance of all 11 banks on the PCA list.
Bank of India's net non-performing assets fell to 5.87 per cent in the October-December quarter from 7.64 per cent in July-September. Its capital adequacy ratio improved to 12.47 per cent from 10.93 per cent.
Bank of Maharashtra's net non-performing assets fell to 5.91 per cent from 10.61 per cent while its capital adequacy improved to 11.05 per cent from 9.87 per cent.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Support Swarajya's 50 Ground Reports Project & Sponsor A Story
Every general election Swarajya does a 50 ground reports project.
Aimed only at serious readers and those who appreciate the nuances of political undercurrents, the project provides a sense of India's electoral landscape. As you know, these reports are produced after considerable investment of travel, time and effort on the ground.
This time too we've kicked off the project in style and have covered over 30 constituencies already. If you're someone who appreciates such work and have enjoyed our coverage please consider sponsoring a ground report for just Rs 2999 to Rs 19,999 - it goes a long way in helping us produce more quality reportage.
You can also back this project by becoming a subscriber for as little as Rs 999 - so do click on this links and choose a plan that suits you and back us.
Click below to contribute.