Following the Reserve Bank of India’s (RBI) decision to remove the lender from the APC framework after more than five years, Central Bank of India shares began trading on Wednesday at 15.5% what’s more.
As of 09:40, the stock was up 11% from its previous close, trading at Rs 22.60 on BSE.
The only bank covered by the RBI PCA framework was the Central Bank of India. Due to its high net non-performing assets (NPA) and low return on assets, it was placed under scrutiny in June 2017. When banks violate specific regulatory standards, such as those relating to return on assets, requirements minimum capital requirement and the amount of non-performing assets, including those related to loans, executive compensation and attendance fees, PCA is triggered.
A weak bank’s ability to continue its recovery is a key prerequisite for the RBI to leave PCA, the RBI said on August 8.
The bank, however, turned a corner in FY22, posting its second consecutive annual profit. During the financial year, it reported a profit of Rs 1,045 crore. Compared to the same quarter of the previous year, it recorded a 14.2% increase in its net profit for the June quarter, standing at Rs 234.78 crore from Rs 205.58 crore. Compared to the same period last year, the gross NPA ratio decreased from 15.92% to 14.9% of gross advances. In addition, net NPAs increased from 5.09% in the first quarter of the prior year to 3.93% in this quarter.
In June, gross advances totaled 1.95 trillion rupees, an increase of 11% over the previous year. Sixty-six percent of the total loan portfolio consisted of small agricultural and retail loans. Deposits as a whole increased by 3.4% to Rs 3.43 trillion. CASA accounted for 51.5% of total deposits.
As a systematic early intervention tool inspired by the PCA framework of the Federal Deposit Insurance Corp. (FDIC), the PCA framework was established in December 2002. Later, in April 2017, these rules were revised.