“The performance of the Central Bank of India, presently under the Prompt Corrective Action Framework (PCAF) of the Reserve Bank of India, was reviewed by the Board of Financial Supervision. As per, by 2022, the bank is not in violation of the PCA norms,” reserve Bank of India said in a release.
The central bank said the lender has also provided a written commitment that it will comply with the norms on an ongoing basis.
“The Bank has given a written commitment that it will adhere to the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis and has apprised RBI of the structural and systemic reforms that it has undertaken that will help meet these commitments. The bank continues to do so,” the release further said.
RBI said the bank’s exit from the PCA restrictions is subject to certain conditions and continuous monitoring.
Central bank of india Net profit rose 14.2 per cent to Rs 234.78 crore in the first quarter ended June of the current fiscal, as against Rs 205.58 crore in the same quarter a year ago.
In the latest quarter, the bank’s gross NPAs fell to 14.9 per cent of gross advances as compared to 15.92 per cent in the year-ago period. Net NPAs also declined to 3.93 per cent from 5.09 per cent in the first quarter of the previous year.
Of the three PSU lenders under the supervision of RBI, Indian Overseas Bank And UCO Bank Was removed from the framework in September 2021.
Central Bank of India was placed under the PCA framework in June 2017 due to its high net non-performing assets (NPAs) and low return on assets.
PCA begins when a bank violates certain regulatory requirements such as return on assets, minimum capital and amount of non-performing assets, including borrowings, management compensation and directors’ fees.
Under the PCA, the bank faces RBI restrictions on dividend distribution, branch expansion, management compensation or the need for promoters to infuse capital.
Last year, the RBI released a revised Prompt Corrective Action (PCA) framework for banks to enable supervisory intervention at an “appropriate time” and act as a tool for effective market discipline.
As per the revised guidelines, capital, asset quality and leverage are the key areas to be monitored in the revised framework.