RBI removed three banks from PCA framework

Guwahati: The Reserve Bank of India (RBI) on Tuesday said that Allahabad Bank, Corporation Bank and Dhanlaxmi Bank have been moved out of the Prompt Corrective Action (PCA) framework.

In a statement issued by RBI, it said that the Board for Financial Supervision reviewed the performance of banks currently under the PCA framework.

The RBI in its statement said that the Board of Financial Supervision noted that Allahabad Bank and Corporation Bank had received Rs. 6896 crore and Rs. 9086 crore respectively which has shored up their capital funds and also increased their loan loss provision to ensure that the PCA parameters were complied with.

The statement also reads as the two banks made the necessary disclosures to the Stock Exchange and after the infusion of capital, the CRAR, CET1, Net NPA and Leverage Ratios are no longer in breach of the PCA thresholds.

It has also been noted in the statement that the banks also apprised RBI of the structural and systematic improvements put in place to maintain these numbers and based on the principles adopted by the BFS decided to remove Allahabad Bank and Corporation Bank from the PCA framework.

However, on January 31, Bank of India, Bank of Maharashtra and Oriental Bank of Commerce were taken out of PCA framework after infusion of capital in these banks.

RBI on Dhanlaxmi Bank said that the bank is found to be not breaching any of the Risk Thresholds of the PCA Framework and therefore, it has decided to take out the bank out of the framework.

RBI said that there are several other government banks in the country that provide about two-thirds of the total loans and as nearly half of them are under a PCA plan and the rest are cautious due to a record of Rs. 10,683.23 crore bad debt, the government has been keen the curbs be relaxed to boost their ability to lend. The performance of these banks will be monitored continuously by RBI under various parameters.

Six public sector undertaking banks-IDBI Bank, UCO Bank, Central Bank of India, Indian Overseas Bank, Dena Bank and United Bank are still under the PCA framework with the removal of Allahabad Bank and Corporation Bank.

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