RBI removes the Central Bank of India from the PCA

According to the RBI, the bank has made a written pledge to continuously abide by the standards for minimum regulatory capital, net non-performing assets, and leverage ratio.

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On September 20, the Reserve Bank of India announced that, subject to a number of conditions and ongoing oversight, it has removed the Central Bank of India, a government-run institution, from the so-called Prompt Corrective Action (PCA) framework.

“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.

Additionally, according to the regulator, the bank has given a written assurance that it will consistently abide by the standards for minimum regulatory capital, net non-performing assets, and leverage ratio.

The RBI stated that the Central Bank of India has also informed it of the structural and systemic adjustments it has implemented that will assist the bank continue to meet these obligations.

The sole bank covered under the PCA framework of the RBI was the Central Bank of India. As a result of its high net non-performing assets (NPAs) and low Return on Assets, it was placed under the PCA framework in June 2017. When banks violate specific regulatory standards, such as those relating to return on assets, minimum capital requirements, and the quantity of non-performing assets, including those related to lending, management compensation, and directors’ fees, PCA is triggered.

RBI limits on dividend distribution, branch development, management compensation, and demanding promoter capital infusion apply to banks subject to PCA. Capital, asset quality, and leverage are the three main areas for monitoring, according to the updated standards.

In the April through June quarter, the Central Bank of India reported an increase in net profit of 14.2 percent to Rs 234.78 crore from Rs 205.58 crore in the corresponding quarter of the previous financial year. In comparison to the same time last year, the gross NPA ratio decreased to 14.9% of gross advances from 15.92%. Additionally, Net NPAs decreased from 5.09 percent in the first quarter of the prior fiscal year to 3.93 percent in that quarter.