State-owned UCO Bank will no longer be subject to strict lending curbs imposed in May 2017, with the Reserve Bank of India (RBI) taking the lender out of the prompt corrective action (PCA) restrictions.
With this, only two banks remain under PCA—Indian Overseas Bank and Central Bank of India.
The central bank uses the PCA framework to rein in banks that have breached certain regulatory thresholds in bad loans and capital adequacy. PCA entails curbs on high-risk lending, setting aside more money on provisions and restrictions on management salary.
UCO Bank, RBI said, has provided a written commitment that it would comply with the norms of minimum regulatory capital, net non-performing asset (NPA) and leverage ratio on an ongoing basis. The Kolkata-based lender has also apprised RBI about the structural and systemic improvements it has put in place to help in continuing to meet these commitments.
“The performance of the UCO Bank, currently under the prompt corrective action framework of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in the breach of the PCA parameters,” RBI said.
As on March 31, UCO Bank’s net NPA ratio stood at 3.94%, down 151 basis points (bps) from the same period last year. Its total capital adequacy ratio under Basel III was at 13.74%, up 204 bps from Q4 of FY20.
{{/usCountry}}As on March 31, UCO Bank’s net NPA ratio stood at 3.94%, down 151 basis points (bps) from the same period last year. Its total capital adequacy ratio under Basel III was at 13.74%, up 204 bps from Q4 of FY20.
{{/usCountry}}RBI governor Shaktikanta Das said on August 6 that it has been taking banks out of the restrictive framework based on assessments.
“We keep on reviewing that position. Recently, we removed one public sector bank from PCA tag. And as and when required requests are received, we analyse it, if it meets RBI’s regulatory requirements and if in our assessment, we feel confident that it’s a fit case, RBI will do the needful. So, we have been taking banks out of PCA,” said Das.