Four Public Sector Banks To Come Out Of Prompt Corrective Action Restrictions Following Improved Performance

Bank of Maharashtra, Corporation Bank, Allahabad Bank and Bank of India are expected to come out of the Prompt Corrective Action (PCA) restrictions following the improved performance, The Hindu has reported.

This is followed by a review of all eleven banks that are under the PCA framework. The performance of these banks was reviewed by the Reserve Bank of India (RBI) Board of Financial Supervision.

The banks have been asked to make an assessment of capital required to meet regulatory requirements. The government will pitch in with capital to help the banks to come of PCA restrictions.

Pune based Bank of Maharashtra which was under PCA turned profitable in July-September quarter. The Corporation Bank has also reported a net profit of Rs 103 crores in September quarter. However, Bank of Allahabad and Bank of India have reported losses.

RBI has set trigger points on the basis of capital-to-risk weighted assets ratio (CRAR), non-performing assets (NPA) and return on assets (ROA). Based on each trigger point, the banks have to follow a mandatory action plan. The government has been asking the RBI to relax PCA restrictions. It had become one of the reasons for the tussle between the central bank and the finance ministry.

Also Read : On PCA, Government Needn’t Lock Horns With RBI; Answers Are Mostly With Finance Ministry