RBI takes UCO Bank out of PCA framework over improved finances

The Kolkata-based lender was placed under PCA in May 2017 on account of high net NPAs and negative RoA

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. This decision gives the bank more freedom for lending, especially to corporations and grow the network, subject to presribed norms.

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 of March 2021, its net NPAs declined to 3.94 per cent from 8.54 per cent in March 2017 (FY17). It 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.

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

The decision on taking out UCO Bank from PCA restrictions is subject to certain conditions and continuous monitoring, RBI said.

The bank has provided a written commitment to comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage Tatio on an ongoing basis.

Its Capital Adequacy Ratio (CAR) stood at 13.74 per cent and Common Equity Tier -I (CET-1) Ratio at 11.14 per cent as on March 31, 2021. Government of India infused Rs 2,600 crore towards capital on March 31, 2021. The lender has also apprised about structural and systemic improvements that it has put in place to continue to meet these commitments.