The Central Bank of India, the only public sector lender under the RBI’s Rapid Remedies (PCA), could see restrictions lifted soon after its financial health improves.
The bank has already made representation to the Reserve Bank of India (RBI) on the basis of improving financial metrics on a sustained basis over the past five quarters, sources said.
According to sources, the RBI is considering the bank’s application and may decide on it soon based on quantitative and qualitative parameters.
The Central Bank of India announced a 14.2% increase in its net profit to Rs 234.78 crore in the first quarter ended June this financial year, from Rs 205.58 crore in the same quarter it a year ago.
In the last quarter, the bank’s gross NPA fell to 14.9% of gross advances, from 15.92% a year ago. Net NPAs also declined to 3.93% from 5.09% in the first quarter of the previous year.
Of the three PSU lenders under RBI watch, Indian Overseas Bank and UCO Bank were removed from the framework in September 2021.
The Central Bank of India was placed under the APC framework in June 2017 due to its high net non-performing assets (NPA) and low return on assets.
PCA is triggered when banks breach certain regulatory requirements such as return on assets, minimum capital and amount of non-performing assets, including on loans, executive compensation and attendance fees.
The bank under PCA faces RBI restrictions on dividend distribution, branch expansion, executive compensation or the requirement for promoters to inject capital.
Last year, the RBI issued a revised Rapid Corrective Action (PCA) framework for banks to enable prudential intervention at the “right time” and also act as a tool for effective market discipline.
In line with the revised guidelines, capital, asset quality and leverage are the primary areas of oversight under the revised framework.
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