RBI Frees Bank of India, Bank of Maharashtra ,Oriental Bank of Commerce From PCA framework  

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.