State-Owned Lender’s Shares Soar 15% on Exiting RBI’s Strict PCA Framework

By Malvika Gurung — Shares of the state-owned lender Central Bank of India (NS:) jumped 8.35% at the time of writing, after soaring over 15% to Rs 23.4 apiece in early trade on Wednesday, nearing its 52-week high of Rs 25.15 apiece achieved on Sept 30, 2021.

The banking stock shot up as the Reserve Bank of India removed it from the Prompt Corrective Action (PCA) framework after more than 5 years.

The banking regulator had placed the state-owned lender under its PCA norms in June 2017 on accounts of high net NPAs and a negative return on assets, which subjected the Mumbai-based public sector lender to strict lending curbs by the RBI.

Central Bank of India (NS:) is the last bank to exit RBI’s tough PCA framework. The regulator stated on Sept 20 that as per the bank’s assessed figures for the financial year ending March 31, 2022, it has not breached the PCA parameters.

The Board for Financial Supervision of RBI reviewed the Central Bank of India’s financial performance. The banking regulator said on Aug 8 that a weak bank’s financial recovery is a crucial precondition to exit the PCA norms.

The Govt bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis stated RBI.

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