RBI lifts lending curbs on Allahabad Bank, Corporation Bank, Dhanlaxmi Bank; removes them from weak-bank watch list

Private sector Dhanlaxmi Bank too has been taken out of the PCA Framework.

RBI lifts lending curbs on Allahabad Bank, Corporation Bank, Dhanlaxmi Bank; removes them from weak-bank watch list

New Delhi: The RBI Tuesday lifted lending curbs on two more public sector banks (PSBs), Allahabad Bank and Corporation Bank, by taking them out of the Prompt Corrective Action (PCA) Framework. Private sector Dhanlaxmi Bank too has been taken out of the PCA Framework.

The PCA framework kicks in when banks breach any of the three key regulatory trigger points -- namely capital to risk weighted assets ratio, non-performing assets (NPA) and return on assets (RoA).

The Board for Financial Supervision (BFS), in its meeting held on February 26 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.

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, RBI said in a statement.

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 apex bank said.

The banks also apprised 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, 2019 that Allahabad Bank and Corporation Bank be taken out of the PCA Framework subject to certain conditions and continuous monitoring. It has also been 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,” RBI statement said.