Prompt Corrective Action Framework-Central Bank of India

RBI has removed the restriction on lending imposed by the Reserve Bank of India (RBI) in June 2017 for the state-owned Central Bank of India (CBI), according to a statement made by the regulator on Tuesday.

It is the last bank to exit RBI’s strict PCA norms.

RBI’s board of financial supervision reviewed the Central Bank’s performance for the year ended 31 March. According to the regulator, the bank has not violated the PCA parameters, based on the assessed figures.

According to RBI, the bank has submitted a written commitment to complying on a continuous basis with regulatory capital, net non-performing assets, and leverage ratios. Additionally, the bank informed the RBI of the structural and systemic improvements it has implemented to enable it to continue to meet its commitments.

RBI said, “Taking all the above into consideration, it has been decided that Central Bank of India is taken out of the PCA restrictions subject to certain conditions and continuous monitoring.”

On 8 August, RBI deputy governor MK Jain announced that the regulator was considering removing PCA restrictions proposed by the Central Bank of India.

Jain said, “It is not only the quantitative parameters, but it is also the qualitative parameters which we examine before taking any decision because when any bank has been taken out of the PCA, it should be on a sustainable basis.”

PCA was introduced in December 2002 as a structured early intervention mechanism similar to the PCA framework of the Federal Deposit Insurance Corporation (FDIC). These regulations were later revised in April 2017.

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