Central Bank of India no longer in PCA of RBI
The Mumbai based Public sector bank, Central Bank of India was removed from the Prompt Corrective Action (PCA) framework by the Reserve Bank of India on 20 September 2022. However, the RBI has said that the bank will still be monitored by it.
The Central Bank of India was put into PCA in June 2017 by the RBI due to deterioration in its asset quality.
RBI had put private sector bank IDBI Bank and three public sector banks Indian Overseas Bank ,UCO Bank and Central Bank of India.
IDBI, Indian Overseas Bank and UCO Bank were removed from the PCA in 2021 by the RBI. At present no banks are in the PCA.
Prompt Corrective Action :
- It was introduced by the RBI in 2017 so that it can intervene in banks which are facing financial problems so that it can be put back on track and restore public confidence in the banking system.
- RBI uses three parameters to identify the banks which need to be put under the PCA framework.
- They are CRAR (Capital to Risk Weighted Asset Ratio), Non-Performing Assets (NPA), Return on Assets (ROA).
- If a bank fails to meet the required CRAR, NPA, ROA criteria stipulated by RBI, then the RBI will deem the bank as risky, facing considerable financial risk and puts it into Prompt Corrective Action for remedial measures.
What happens when a bank is put in PCA ?
- When the Bank is put in PCA the RBI can issue guidelines for the bank and put certain restrictions on the bank.
- The RBI can put restrictions on banks from taking loans from the market and ask the bank to infuse capital in its operation.
- It can also direct the bank to stop new recruitment, stop opening of new branches, new business, reduce or stop giving dividends, change its management , ask the bank to recapitalise or can ultimately close or merge the bank with other banks.
ADDITIONAL INFORMATION -
Central Bank of India :
- It was set up in 1911. It was the first Indian Commercial bank to be owned and managed by Indians.
- The Bank was nationalized in 1969 and now it is owned by the Government of India.
- Tagline of the bank: Central to you since 1911.
- Headquarters: Mumbai, Maharashtra
- Managing Director(MD) and Chief Executive Officer (CEO): M V Rao
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