On September 20, the Reserve Bank of India (RBI) said it had removed the state-run Central Bank of India from the so-called prompt corrective action (PCA) framework, subject to certain conditions and ongoing monitoring.

“Notably, based on the bank’s assessment data for the year ended March 31, 2022, the bank has not violated the PCA parameters,” the RBI said in a statement.

In addition, the bank has provided a written undertaking to continue to comply with the regulator’s rules on minimum regulatory capital, net non-performing assets and leverage.

The Central Bank of India has also informed the RBI of the structural and systemic improvements it has implemented, which will help the bank continue to deliver on these commitments, the RBI said.

The Central Bank of India is the only bank under the RBI PCA framework. It was included in the PCA framework in June 2017 due to its high net non-performing assets (NPA) and low return on assets. PCA is triggered when a bank violates certain regulatory requirements, such as return on assets, minimum capital and the number of non-performing assets, including loans, management compensation and director fees.

A bank under PCA faces RBI restrictions on dividend distribution, branch expansion, management compensation or requiring capital injection from promoters. Funding, asset quality and leverage are critical areas under the revised guidelines.

The central bank of India reported that net profit rose 14.2% to Rs 234.78 crore in the April-June quarter, compared with Rs 205.58 crore last fiscal period. The total non-performing asset ratio fell to 14.9% of total advances, compared to 15.92% in the same period last year. Net NPA also fell to 3.93% from 5.09% in the first quarter of the previous fiscal year.