India’s apex bank has lifted prompt corrective action (PCA) restrictions on UCO Bank after a review by the Board for Financial Supervision.
The decision is subject to certain conditions and continuous monitoring.
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In a written commitment, the bank told the Reserve Bank of India (RBI) that it would adhere to the norms of Minimum Regulatory Capital, Net NPA as well as Leverage ratio.
The bank also informed the central bank of the structural and systemic upgrades implemented tp meet the commitments.
“It was noted that as per its published results for the year ended March 31, 2021, the bank is not in the breach of the PCA parameters,” the central bank said.
UCO was put under the PCA framework in 2017 after high net-performing assets (NPAs) and negative return on assets (RoAs).
At the end of March 2021, the bank’s net NPA ratio was 3.94%, down 151 basis points (bps) from a year ago.
Its total capital adequacy ratio under Basel III stood at 13.74%, up 204 bps from Q4 of FY20.
The PCA framework, which puts various restrictions on ailing banks till they regain health, was introduced in 2002 and later revised in 2017.
Banks under PCA have caps on lending operations and management compensation as well as other restrictions.
Earlier this year, the RBI took IDBI Bank out of PCA framework.
Currently, Indian Overseas Bank, and Central Bank of India are under PCA.
In March this year, a report said that India is planning to infuse new capital in banks that are currently under the central bank’s PCA framework.
