Home / Industry / Banking /  Central Bank exits RBI’s PCA framework
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MUMBAI : State-owned Central Bank of India will no longer be subject to strict lending curbs imposed by the Reserve Bank of India (RBI) in June 2017, as the regulator on Tuesday said that the bank has been taken out of the prompt corrective action (PCA) restrictions.

It is the last bank to exit RBI's strict PCA norms.

The performance of the Central Bank of India was reviewed by the board for financial supervision of RBI. The regulator said that as per the assessed figures of the bank for the year ended 31 March, it is not in the breach of the PCA parameters.

The 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. It 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.

"Taking all the above into consideration, it has been decided that Central Bank of India is taken out of the PCA restrictions subject to certain conditions and continuous monitoring," RBI said.

RBI deputy governor MK Jain had said on 8 August that the regulator is examining a request from Central Bank of India on removing PCA restrictions.

"It is not only the quantitative parameters, but it is also the qualitative parameters which we examine before taking any decision because when any bank has been taken out of the PCA, it should be on a sustainable basis," said Jain.

The PCA framework was introduced in December 2002 as a structured early intervention mechanism along the lines of the Federal Deposit Insurance Corp.’s (FDIC) PCA framework. These regulations were later revised in April 2017. 

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