RBI removes Central Bank of India from APC framework; Know the details

The Reserve Bank of India (RBI) announced on Tuesday that it has decided to exempt the Central Bank of India from the restrictions of prompt corrective measures (PCA), subject to certain conditions and continued monitoring. The bank was placed under the APC in June 2017 due to its low return on assets and high net non-performing assets (NPA).

“The performance of the Central Bank of India, currently under RBI’s Rapid Corrective Action Framework (PCAF), has been reviewed by the Financial Supervisory Board. It has been noted that according to the bank’s assessed figures for the financial year ended March 31, 2022, the bank is not in breach of the parameters of the PCA,” the RBI said in a notification on Tuesday.

He added that the bank has committed in writing to continuously meet the minimum regulatory capital, net NPA and leverage ratio standards and has informed the RBI of the structural and systemic improvements it has put in place, which which will help the bank to continue to meet these commitments.

“In view of all the above, it has been decided that the Central Bank of India is removed from the PCA restrictions subject to certain conditions and continued monitoring,” the central bank said.

PCA is triggered when banks violate certain regulatory requirements such as return on assets, minimum capital and amount of non-performing assets, including on loans, executive compensation and attendance fees.

During the first quarter ended June 2022, the Central Bank of India reported a 14.2% increase in net profit to Rs 234.78 crore 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 public lenders subject to the RBI’s PCA restrictions, UCO Bank and Indian Overseas Bank were already removed from the framework in September 2021.

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