RBI breathes life into Central Bank of India, recalls monitoring

In a statement on September 20, the Reserve Bank of India announced that it had removed the Central Bank of India from the so-called Prompt Corrective Action framework, subject to certain conditions and continuous monitoring.

“It was noted that as per the assessed figures of the bank for the year ended March 31, 2022, the bank is not in breach of the PCA parameters,” the RBI said in a statement.

According to the regulator, the bank has confirmed in writing that it will comply with the norms of minimum regulatory capital, net non-performing assets, and leverage ratio on an ongoing basis.

RBI said, “Central Bank of India has also apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.”

In June 2017, the Central Bank of India was placed under the RBI’s PCA framework as a result of its high net non-performing assets (NPAs) and low Return on Assets. PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital, and volume of non-performing assets, including lending, management compensation, and directors’ fees.

RBI restrictions apply to banks operating under PCA with regard to dividend distribution, branch expansion, management compensation, and infusion of capital into the bank by promoters. As per the revised guidelines, capital, asset quality and leverage are the key areas for monitoring.

Central Bank of India reported a 14.2 percent rise in net profit to Rs 234.78 crore in the April-June quarter, as compared to Rs 205.58 crore in the same quarter of the previous financial year. Gross NPA ratio fell to 14.9 percent of the gross advances as compared to 15.92 percent in the year-ago period. Net NPAs also fell to 3.93 percent from 5.09 per cent in the first quarter of the previous financial year.

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