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3 more banks exit RBI’s framework curbing loans

MUMBAI: The RBI on Tuesday lifted lending curbs on two extra public sector banks (PSBs) — Allahabad Bank and Corporation Bank — by way of taking away them from its advised corrective action (PCA) watch listing. Another non-public lender, Dhanlaxmi Bank, has additionally been taken out of the PCA.

The PCA framework is designed to stay a take a look at on the asset high quality of susceptible banks by way of preventing them from lending till they toughen monetary parameters like capital adequacy and the ratio of bad loans to overall loans.

The newest transfer follows a meeting of the RBI’s board for monetary supervision (BFS) to study the position of the banks after the government final week introduced a Rs 48,239-crore capital infusion into 12 public sector banks. Noting that Allahabad Bank and Corporation Bank had won Rs 6,896 crore and Rs 9,086 crore respectively, the RBI mentioned that the infusion has shored up their capital budget and in addition increased their mortgage loss provision to ensure that the PCA parameters had been complied with.

Last month, Bank of India, Bank of Maharashtra and Oriental Bank of Commerce got out of RBI’s lending restrictions. Of the 11 banks that had been positioned beneath PCA final year, six continue to be in RBI’s watch listing. They are Central Bank of India, Dena Bank, IDBI Bank, Indian Overseas Bank, UCO Bank and United Bank of India. Of these, Dena Bank will likely be merged with Bank of Baroda, and IDBI Bank is expected to bounce again following the capital infusion by way of its new promoter Life Insurance Corporation.

The RBI mentioned the 2 PSBs have made the essential disclosures to the inventory alternate that — after infusion of capital — the capital to risk-weighted property ratio (CRAR), tier-1 capital equity, internet non-performing asset and leverage ratios are now not in breach of the PCA thresholds.

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