Corporation Bank, Allahabad Bank next in line for PCA exit

Corporation Bank and Allahabad Bank, who have received the maximum recap funds in Wednesday`s infusion, are the most likely candidates to get out of the PCA (prompt corrective action) in the next round. So far three banks - BoI, BoM and OBC -- have exited the the PCA framework of the RBI. The call for these two banks will be taken up by RBI. Allahabad Bank also faces lending restrictions due to its earlier worst asset quality.

Finance Ministry will infuse Rs 9,086 crore in Corporation Bank and Rs 6,896 crore in Allahabad Bank -- the two "better-performing" banks currently under the PCA framework of the Reserve Bank of India.

Both these banks now have better parameters to escape PCA -- Core Equity Capital, Tier I Capital, Capital to Risk weighted ratio (CRAR) and net NPA.

"The aim is to equip better performing PCA banks to be above regulatory PCA threshold," said Rajeev Kumar, Banking Secretary.

Already over Rs 1 lakh crore of capital infusion has taken place.

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Kumar said that government has infused Rs 1.01 lakh crore in FY19 and has "withheld Rs 5,000 crore as cushion in case further recap is required". He said that the government was eyeing recoveries worth Rs 1.8 lakh crore in 2018-19.