RBI puts Bank of India under prompt corrective action

The Bank of India had a net non-performing assets ratio of 6.47% as of end-September.

Bank of India said on Wednesday that the Reserve Bank of India has initiated ‘prompt corrective action’ (PCA) against the lender over high bad loans.

The facade of the Reserve Bank of India (RBI) head office is pictured in Mumbai. (AFP)

High net non-performing assets (NPA), insufficient common equity tier 1 (CET1) capital and negative return on assets (ROA) for two consecutive years has prompted the action, the bank said in a statement.

The RBI issues a PCA to spur lenders to deal with bad debts, as one of the measures intended to tackle the menace of bad debt that has plagued Indian banks.

The bank had a net non-performing assets ratio of 6.47% as of end-September.

Shares of the bank dropped as much as 5.4% to 171.45 rupees in afternoon trade in a Mumbai market that was trading 0.17% higher.