With IDBI Bank out of PCA regime, other three may follow: Experts
On the liabilities side, these entities have made efforts to increase the share of low-cost money in current and savings accounts
 "IDBI Bank")
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Even though the present looks secure, many challenges lie ahead
With the RBI taking IDBI Bank out of the Prompt Corrective Action (PCA) regime, experts expect a similar outcome for the three state-owned lenders — Central Bank of India, UCO Bank and Indian Overseas Bank — that are still under restrictions. Here’s why:
Through the financial year, these banks have cleaned up their balance sheets and have enhanced their provision coverage ratio.
Having borne the brunt of corporate dud loans, these are now focusing on growing retail, and micro, small, and medium enterprises segments to build a sturdy loan book.
On the liabilities side, these entities have made efforts to increase the share of low-cost money in current and savings accounts. Households’ desire to keep large amounts of money with banks during uncertain times such as the pandemic has helped garner deposits.
An interest rate cut has helped reduce the cost of funds.
Even though the present looks secure, many challenges lie ahead. Intense competition from agile private banks, rapid changes in the digital banking space, and the heavy task of nurturing governance and talent are issues these entities have to confront.
Through the financial year, these banks have cleaned up their balance sheets and have enhanced their provision coverage ratio.
Having borne the brunt of corporate dud loans, these are now focusing on growing retail, and micro, small, and medium enterprises segments to build a sturdy loan book.
On the liabilities side, these entities have made efforts to increase the share of low-cost money in current and savings accounts. Households’ desire to keep large amounts of money with banks during uncertain times such as the pandemic has helped garner deposits.
An interest rate cut has helped reduce the cost of funds.
Even though the present looks secure, many challenges lie ahead. Intense competition from agile private banks, rapid changes in the digital banking space, and the heavy task of nurturing governance and talent are issues these entities have to confront.