UCO bank is now out of PCA framework

Reserve Bank of India on Wednesday has taken public sector lender UCO Bank out of Prompt Corrective Action (PCA) framework (PCA) on improvement in financial and credit profile.

“The performance of the UCO Bank, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in the breach of the PCA parameters”, RBI said.

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).

As per annual reports of UCO bank, UCO bank’s net NPAs as of March 2021, declined to 3.94 per cent from 8.54 per cent in March 2017 . The bank posted a net profit of Rs 167 crore in FY21 as against net loss of Rs 1,851 crore in FY17. The ROA was 0.06 per cent for FY21 while it was negative at -0.75 per cent for FY17. Capital Adequacy Ratio (CAR) stood at 13.74 per cent against 10.93 percent in March 2017, and Common Equity Tier -I (CET-1) Ratio at 11.14 per cent as on March 31, 2021. Further, the Government of India infused Rs 2,600 crore towards capital on March 31, 2021.

According to Central Bank’s notification, the bank has 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 RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.

The bank has 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 RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.

“Taking all the above into consideration, it has been decided that UCO Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring”, RBI said.

This decision of RBI gives the bank more freedom for lending, especially to corporations and grows the network, subject to prescribed norms.