The Reserve Bank of India (RBI) on Wednesday said it has removed Chennai-based Indian Overseas Bank from the PCA (prompt corrective action) restrictions framework, subject to certain conditions and continuous monitoring.

“Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring,” the RBI said in a statement.

“The performance of the Indian Overseas Bank, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in breach of the PCA parameters,” the bank said.

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“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 added.

This means Indian Overseas Bank will no longer face strict lending restrictions that were put in place by the RBI in October 2015.

Under PCA, the RBI imposes business restrictions on banks with weak financial metrics. The severity of the PCA restrictions will be decided on a case to case basis.

In the first quarter, the public sector lender had reported a net profit of R 327 crore as provisions for bad loans declined. Gross non-performing assets declined to 11.48 percent from 13.90 percent (in absolute terms to Rs 15,952 crore from Rs 18,291 crore) while net NPAs declined to 3.15 percent (Rs 3,998 crore) from 5.10 percent (Rs 6,081 crore).

(Edited by : Jomy Jos Pullokaran)

First Published: Sep 29, 2021, 07:14 PMIST