Finance ministry expects 3-4 more banks to come out of RBI's PCA framework this year

economictimes | February 24, 2019

Finance ministry expects 3-4 more banks to come out of RBI's PCA framework this year
The finance ministry expects three to four more lenders to come out of weak bank list of the Reserve Bank in the next six to eight months on account of improvement in financial health amid capital infusion and falling bad loans. The recent capital infusion of Rs 48,239 crore in 12 public sector banks (PSBs) will help Corporation BankNSE 0.50 % and Allahabad BankNSE -0.97 % to come out of the Prompt Corrective Action (PCA) framework in the next few weeks, sources said. Corporation Bank is the biggest beneficiary of this round of capital infusion with Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896 crore. This infusion will help these two lenders meet requisite capital thresholds of 7.375 CET-1 ratio, 8.875 per cent Tier I ratio, 10.875 per cent of capital-to-risk weighted assets ratio (CRAR) and the net NPA ratio threshold of below 6 per cent.  The RBI may in the next few weeks take a decision to remove these two lenders out of PCA Dena Bank, which is among eight entities under PCA, will cease to exist from April 1, 2019. So, the list will further shorten with the bank merging with Bank of Baroda beginning next fiscal, sources said.

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