Shares of Central Bank rally 15% as RBI removes it from PCA restrictions

5paisa Research Team

Last Updated: 10th December 2022 - 04:03 pm

Central Bank is the last among the 11 PSUs to exit the PCA framework

Reserve Bank of India(RBI) on September 20 removed Central Bank of India from the PCA (Prompt Corrective Action) restrictions subject to certain conditions and continuous monitoring. The bank provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has apprised the RBl of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.

In 2017, RBI put 11 Public sector (PSU) banks under PCA framework which were found to be in breach of PCA parameters. Under the framework, RBI monitors key performance indicators of the banks as an early warning exercise and PCA is initiated once the thresholds relating to capital, asset quality and profitability are breached.

While Indian Overseas Bank and UCO Bank were removed from the framework last September, Central Bank of India is the last one to be removed from the PCA curb list. The curb was lifted upon review of the bank’s performance by the Board for Financial Supervision. The board found the bank was no more in breach of the PCA parameters on the basis of the assessed figures for FY 2021-22.

For the quarter ended June 30, 2022, Net NPA reduced to 3.93% in June 2022 registering an improvement of 627 bps from 10.2% in March 2017. Compared to 2017, the CRAR improved from10.95% to 13.33%.

Shares of Central Bank opened 15% higher than its previous close of Rs 20.35 on the back of the news. Intraday high and low in the mid-day session were logged at Rs 23.40 and Rs 21.80.

At 11.30, the stock of Central Bank shed some of the earlier gains and were quoting Rs 22 up by 8.11%.

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