Central Bank of India removed from RBI's Prompt Corrective Action list

21 Sept 2022 , 01:18 PM

After the Reserve Bank of India (RBI) removed the public sector lender from its Prompt Corrective Action (PCA) list on compliance with criteria like net non-performing assets (NNPAs) and capital ratios, shares of the Central Bank of India (CBI) increased 15% to Rs23.50 on the BSE in intraday trade on Wednesday amid high volumes.

When compared to the S&P BSE Sensex's 0.05% drop at 09:41 AM, the CBI stock was trading 9% higher at Rs22.15. Around 33.16 million equity shares had been traded on the NSE and BSE as of the time this story was being written, more than double the counter's previous trading volume. Prior to this, on September 30, 2021, the stock had reached a 52-week high of Rs25.15 a share.

"The Board for Financial Supervision examined how the Central Bank performed. The lender is not in violation of the PCA guidelines, according to the bank's evaluated numbers for the year ended March 31, 2022 "a statement from RBI said.

Due to significant net non-performing assets (NPAs) and a poor return on assets, the RBI has put Central Bank under PCA in June 2017. Analysts said that PSU banks have lagged behind in recent years due to worries about muted lending growth and pressure on asset quality.

Due to sluggish demand, balance sheet deleveraging, a switch to other funding sources, and lenders' risk aversion, bank lending growth has been relatively slow over the past few years. The emergence of Covid-19, which brought about further uncertainty over growth and asset quality, made the underperformance even worse.

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