RBI to lift up restrictions from Central Bank as bank’s financial condition improves.

RBI to lift up restrictions from Central Bank

The Central Bank of India which is the only public sector lender under the shell of RBI’s Prompt Corrective Actions (PCA), is expected to lift up restrictions as bank’s financial condition improves.

According to a report published in the Zee Business, the RBI is looking at the bank's request and may take a view on this soon based on quantitative and qualitative parameters.

In the first quarter which ended in June, 2022 the Central Bank of India reported an increase of 14.2 per cent rise in net profit to Rs 234.78 crore as compared to Rs 205.58 crore in the same quarter a year ago.

It is to be noted that the Central Bank of India was put under the shell of RBI in June 2017 because of its high net non-Performing assets (NPAs) and less return on assets.

PCA is activated when banks fractures when some of the regulatory requirements such as return on asset, minimum capital and quantum of the non-performing assets including on lending, management compensation and directors' fees.

The bank under PCA faces RBI restrictions on dividend distribution, branch expansion, management compensation or requiring promoters to infuse capital.

The RBI published a revised Prompt Corrective Action (PCA) framework for banks in order to enable supervisory intervention at "appropriate time" and also act as a tool for effective market discipline.

The bank has made its representation to RBI and showed continued improvement in financial health for the past five quarters.

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