New Delhi: The remaining six nationalised banks under the Prompt Corrective Action (PCA) list must make progress on seven parameters, including net interest margins and non-performing asset (NPA) recognition, to receive the government’s help for coming out of the PCA framework, the Finance Ministry said. Due to inadequate capital and high levels of bad debt, Allahabad Bank, United Bank of India, Corporation Bank, UCO Bank, Central Bank of India and Indian Overseas Bank are still under PCA.
RBI lifts a variety of restrictions on lending and expansion of businesses when removing banks from the list.
5 lenders already out of framework
Out of the 11 nationalised banks under the PCA framework last year, RBI removed three nationalised banks – Bank of Maharashtra, Bank of India and Oriental Bank of Commerce – from its PCA plan last month. The two other banks out of the framework are IDBI Bank, which has been taken over by Life Insurance Corporation of India (LIC), and Dena Bank, which is being merged with Vijaya Bank and Bank of Baroda.
The 7 parameters banks need to improve on
“We have told these banks to improve upon net interest margins (NIMs), CASA (current account savings account), RWA (Risk Weighted Assets), NPA recognition, divergence (disparity in loan recognisation), operating profit and non-core asset selling to be able to get our support for being out of the PCA,” official sources said.
The PCA is imposed on those banks whose capital, asset quality and/or profitability do not meet thresholds specified by the central bank. Finance ministry executive earlier claimed that the remaining six banks would probably come out of PCA in the next two fiscal quarters or by June.