RBI Brings Life To India’s Central Bank, Surveillance Recall, Lenders Will Exit The PCA Framework

RBI Brings Life To India’s Central Bank, Surveillance Recall, Lenders Will Exit The PCA Framework

September 22, 2022: Lenders will exit the PCA framework after providing written commitments to continue to meet regulatory minimum capital, net non-performing assets, and leverage ratio standards, RBI said.

The Reserve Bank of India announced on Sept. 20 that it had withdrawn the state-owned Central Bank of India from the Prompt Corrective Action (PCA) framework, subject to certain conditions and continued monitoring.

“The bank was determined not to have breached the PCA parameters based on the bank’s estimated figures for the year ended 31 March 2022,” the RBI said in a statement.

In addition, the bank has provided written commitments to continue to comply with regulatory minimum capital, net non-performing assets, and leverage ratio standards, regulators said.

The Central Bank of India also updated the RBI on the structural and systemic improvements introduced by the RBI.

The Central Bank of India was the only bank under the PCA framework of the RBI. In June 2017, it was placed in the PCA framework due to high non-performing assets (NPA) and low return on investment.

A PCA is triggered when a bank violates certain regulatory requirements. B. Return on capital, minimum capital, and amount of distressed assets, including loans, management fees, and board fees.

Banks under the PCA face RBI restrictions on promoter requirements to pay dividends, expand branches, remunerate management or make capital injections.

Under the revised guidelines, capital, asset quality, and leverage are key areas to monitor. The Central Bank of India reported a 14.2% increase in net profit of Rs.234.78 crore in the April-June quarter compared to Rs.205.58 crore in the same quarter of the previous financial year.

The total NPA ratio decreased to 14.9% of total advance payments compared with 15.92% in the same period last year. Net NPA also decreased to 3.93% from 5.09% in the first quarter of last year.

Read more Business News at SugerMint. Follow us on Twitter, Instagram, Facebook, LinkedIn