With this, the RBI has lifted PCA curbs on six banks. On January 31, the RBI has removed the PCA tag on three PSU banks — Bank of India, Bank of Maharashtra and Oriental Bank of Commerce. (Source: File) With this, the RBI has lifted PCA curbs on six banks. On January 31, the RBI has removed the PCA tag on three PSU banks — Bank of India, Bank of Maharashtra and Oriental Bank of Commerce. (Source: File)

The Reserve Bank of India has taken out two more public sector banks — Allahabad Bank and Corporation Bank — and private sector Dhanlaxmi Bank of the Prompt Corrective Action (PCA) framework and allowed them to restart normal lending activities and expansion of businesses.

The Board for Financial Supervision (BFS) of the RBI, in its meeting held on Tuesday, reviewed the performance of banks under PCA and noted that the government has infused fresh capital on February 21 into various banks including some of the banks currently under the PCA framework.

With this, the RBI has lifted PCA curbs on six banks. On January 31, the RBI has removed the PCA tag on three PSU banks — Bank of India, Bank of Maharashtra and Oriental Bank of Commerce. However, IDBI Bank, UCO Bank, Central Bank of India, Indian Overseas Bank, Dena Bank and United Bank of India are still under the PCA framework.

“Of these banks, the BFS noted that Allahabad Bank and Corporation Bank had received Rs 6,896 crore and Rs 9,086 crore respectively. This has shored up their capital funds and also increased their loan loss provision to ensure that the PCA parameters were complied with,” the RBI said.

The two banks have also made the necessary disclosures to the stock exchange that post infusion of capital, the CRAR, CET1, Net NPA and leverage ratios are no longer in breach of the PCA thresholds. The banks also apprised the RBI of the structural and systemic improvements put in place to maintain these numbers. “Accordingly, based on the principles adopted by the BFS in its earlier meeting dated January 31, 2019, it was decided in the meeting held on February 26 that Allahabad Bank and Corporation Bank be taken out of the PCA Framework subject to certain conditions and continuous monitoring,” the RBI said.

It has also decided to take Dhanlaxmi Bank out of the PCA framework, subject to certain conditions and continuous monitoring, as the bank is found to be not breaching any of the risk thresholds of the PCA framework. The RBI move to place 11 PSU banks — hit by high non-performing assets and losses — and one private sector bank under PCA framework last year was one of the contentious issues between the Centre and the RBI which was then headed by Urjit Patel. While the government wanted the RBI to lift the curbs on these banks to boost credit flow to productive sectors, the RBI then refused to budge.

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