RBI takes IDBI Bank out of PCA framework, subject to certain conditions

Board for Financial Supervision (BFS) found IDBI Bank not in breach of PCA parameters on capital, Net NPA and Leverage Ratio

IDBI Bank has been taken out of the Prompt Corrective Action (PCA) framework, subject to certain conditions and continuous monitoring, the Reserve Bank of India said in a statement.

The performance of IDBI Bank Limited was reviewed by the Board for Financial Supervision (BFS) in its meeting held on February 18, 2021 and it was decided that the lender will be taken out of PCA framework.

"It was noted that as per published results for the quarter ending December 31, 2020 the bank is not in breach of the PCA parameters on regulatory capital, Net NPA and Leverage ratio," the central bank said.

"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," it said.

IDBI Bank was placed under PCA in May, 2017. Under the PCA framework, lenders which slip below certain financial parameters such as capital ratios, asset quality and profitability will be under the close watch of RBI. 

The lender reported a net profit of Rs 378 crore in the quarter ended December 2020 (Q3FY21), aided by a rise in net interest income. This is the fourth consecutive quarter of profit for the lender. 

Net interest income rose 18 per cent to Rs 1,810 crore compared with the same period a year-ago, while net interest margin (NIM) improved by 60 basis points to 2.87 per cent in the quarter. 

The lender's scrip ended 5.2 per cent higher on NSE at Rs 38.35 a piece.