State-run Allahabad Bank and Corporation Bank, while privately controlled Dhanlaxmi Bank are the latest banks to be taken off the PCA framework
New Delhi: Following an infusion of capital from the government, the Reserve Bank of India (RBI) has removed three banks from its so-called prompt corrective action (PCA) list. The RBI had imposed regulatory constraints on 11 nationalised banks in recent years due to inadequate capital and high levels of debt. State-run Allahabad Bank and Corporation Bank, while privately controlled Dhanlaxmi Bank are the latest banks to be taken off the PCA framework.
Regulatory constraints resulted in positives
After increased capital ratios and loan-loss provisioning, the two state banks were taken off the list by the RBI under its new Governor Shaktikanta Das. "This has shored up their capital funds and also increased their loan loss provision to ensure that the PCA parameters were complied with," the RBI said referring to the government's latest capital injection.
Private bank Dhanlaxmi Bank was removed from the list since it had not breached any of the risk thresholds.
Three more lenders removed from PCA list last month
Out of 11 state-run banks, RBI last month removed three nationalised banks – Bank of Maharashtra, Bank of India and Oriental Bank of Commerce – from its PCA plan. Additionally, Dena Bank, which is being merged with Vijaya Bank and Bank of Baroda and IDBI Bank, which has been taken over by Life Insurance Corporation of India (LIC), were also removed from the framework.
As part of its recapitalisation programme, the government last week said it would infuse Rs. 48,239 crore into 12 state lenders. "RBI will continuously monitor the performance of these banks under various parameters," the RBI said.