RBI initiates PCA against Corporation Bank

The Reserve Bank of India (RBI) has initiated "prompt corrective action" (PCA) against state-run lender Corporation Bank in the view of its high non-performing assets (NPAs).

"The RBI vide their letter dated December 7, 2017 has placed the bank under PCA framework in view of high NPA and requirement to raise capital of the bank," the state-run lender said in a regulatory filing to the BSE on Wednesday.

"This action will not have any material impact on the performance of the bank and will contribute to improvement in internal control of the bank in its activities."

Earlier, the RBI had initiated PCA on Bank of Maharashtra, Central Bank of India, IDBI Bank, Indian Overseas Bank, UCO Bank and Dena Bank.

The development follows the April 13, 2017, revision of the PCA guidelines by the RBI.

In April, the RBI said that capital, asset quality and profitability would be the basis for the PCA framework on which the banks would be monitored and has defined three kinds of risk thresholds.

In a notification issued then, the RBI said mandatory action to be taken when a bank breaches the risk threshold includes restriction on dividend payment, remittance of profits, restriction on branch expansion, higher provisions, restriction on management compensation and director's fees.

"The PCA framework would apply without exception to all banks operating in India, including small banks and foreign banks operating through branches or subsidiaries based on breach of risk thresholds of identified indicators," the RBI had said.

In addition, the RBI can ask the banks to prepare a time bound plan and commitment for reduction of NPAs; restrict or reduce credit expansion for borrowers below certain rating grades or unrated borrowers, unsecured exposures, loan, concentration of loans in identified sectors or borrowers.

--IANS

rv/bg


(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel