Reserve Bank of India (RBI) has taken public sector lender UCO Bank out of Prompt Corrective Action (PCA) framework after 4 years. This comes as a big relief to the bank as it can finally start lending as the curbs get lifted.
What is PCA?
PCA is a framework under which banks with weak financial metrics are put under watch by the RBI.
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Why was UCO Bank under PCA?
The Kolkata-based lender was placed under PCA in May 2017 on account of high Net Net-Performing Assets (NPAs) and negative Return on Assets (RoAs) in May 2017.
So, what changed for UCO Bank?
As of March 2021, bad loans declined to 3.94 per cent of the loan book from 8.54 per cent in March 2017. The bank also posted a net profit of Rs 167 crore in FY21 as against net loss of Rs 1,851 crore when it had curbs imposed on it.
Are there still banks under lending curbs, PCA?
After UCO bank's exit, two banks Indian Overseas Bank and Central Bank of India under still under the RBI's watch under PCA.