RBI puts Central Bank of India under Prompt Corrective Action

Key Highlights: 

• Gross NPAs of Central Bank stood at 17.81% in March 2017
• RBI put Central Bank under PCA framework due to high NPA and RoA
• Return on Asset of the bank was negative at 0.80% by end of FY17

Central Bank of India on Wednesday announced that the Reserve Bank of India (RBI) has initiated a prompt corrective action (PCA) on the bank.

In a BSE filing, Central Bank of India said, “RBI vide their letter dated on June 13, 2017, has put the bank under prompt corrective action in a view of high net NPA and negative RoA.”

Taking it in a positive way the bank further said, “We believe that corrective measures arising out of the PCA will help improving overall performance of the bank.”

Share price of Central Bank of India closed at Rs 101.65 per piece on BSE, up 2.52%.

Gross non-performing assets (GNPA) of Central Bank of India to gross advances which stood at 6.09% by end of FY15 has now reached to 17.81% in FY17. 

From Q4FY16 till end of FY17, the bank has recognized double-digit gross NPAs.

In value terms, gross NPAs were at Rs 27,251.33 crore of March 2017 versus Rs 22,720.88 crore of March 2016.

Net NPAs also increased to 10.20% as on March 2017, as against 7.36% in the similar period of previous year.

Return on Asset (RoA) of Central Bank of India was negative at 0.80% in March 2017 compared to negative 0.48% a year ago same period.

Recently, the apex bank has initiated PCA move on banks like IDBI Bank, Dena Bank, Indian Overseas Bank and UCO Bank on account of their mounting non-performing assets.

As per RBI statement, prompt corrective action has been effective from April 2017, and is formed for as a supervision tool initiated in case of some public sector banks with high NPAs.