UCO Bank has been removed from the PCA’s watch list: RBI

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The Reserve Bank withdrew UCO Bank from its Prompt Corrective Action Framework (PCAF) on Wednesday, citing improvements in a number of metrics as well as a formal pledge from the state-owned institution to adhere to the minimum capital requirements.

The RBI said in a statement that after reviewing the performance of the UCO Bank, the Board for Financial Supervision determined that the bank was not in violation of the PCA criteria based on the published financial statements for 2020-21.

The Reserve Bank withdrew UCO Bank from its Prompt Corrective Action Framework (PCAF) on Wednesday, citing improvements in a number of metrics as well as a formal pledge from the state-owned institution to adhere to the minimum capital requirements.

The RBI said in a statement that after reviewing the performance of the UCO Bank, the Board for Financial Supervision determined that the bank was not in violation of the PCA criteria based on the published financial statements for 2020-21.

The bank has also given a written pledge to adhere to the Minimum Regulatory Capital, Net NPA, and Leverage Ratio standards on an ongoing basis, according to the statement.

The lender has also informed the RBI of the structural and systemic reforms it has implemented, which will assist the bank in meeting its financial obligations.

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

When banks fail to meet certain regulatory standards, such as return on assets, minimum capital, and the amount of non-performing assets, PCA is triggered.

The constraints make it difficult for banks to lend freely in a variety of ways, forcing them to operate in a constrained environment that stifles growth.

UCO Bank’s net profit more than quadrupled to Rs 101.81 crore in the first quarter of the fiscal year ended June 30, as bad loans decreased dramatically.

As of June 30, 2021, the lender’s gross non-performing assets (NPAs or bad loans) were 9.37 percent of gross advances, down from 14.38 percent at the end of June 2020.

The net nonperforming assets (NPAs) fell to 3.85 percent (Rs 4,387.25 crore) from 4.95 percent (Rs 5,138.18 crore).

UCO Bank’s stock ended the day on the BSE at Rs 12.81 a share, almost unchanged from the previous day. The announcement by the RBI occurred after market hours.

Indian Overseas Bank (IOB) and Central Bank of India are still under the PCA framework.

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