Lower growth capital remains a key challenge for banks under PCA

Though capital adequacy and net NPAs will improve, banks will need more capital to expand

In a move to take some more public sector banks (PSBs) out of the Reserve Bank of India’s (RBI’s) prompt corrective action (PCA) framework, over 59 per cent of the approved Rs 48,239-crore capital infusion was allocated to a few PCA banks by the government on Wednesday.

Having got the highest capital allocation, Corporation Bank and Allahabad Bank, which were allocated highest  recap amout, are potential candidates that could come out of PCA. Not surprising that shares of these banks surged 5 per cent and 19 per cent, respectively, on Thursday.
 

Even the other PSB stocks traded in the green.