Reserve Bank of India has taken public sector lender UCO Bank out of the Prompt Corrective Action (PCA) framework 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 prescribed 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).
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Following UCO Bank’s exit, two banks — Indian Overseas Bank and Central Bank of India — remain under PCA. The central bank uses the PCA framework to rein in banks that have breached certain regulatory thresholds in bad loans and capital adequacy. PCA entails curbs on high-risk lending, setting aside more money on provisions and restrictions on management salary.
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