Reserve Bank of India has placed Bank of India (BoI) under Prompt Corrective Action Framework due to the bank’s high non-performing assets (NPAs), insufficient common equity tier 1 capital (CET 1) and negative return on assets (ROA).
The decision was taken consequent to the onsite inspection under the risk based supervision model carried out for year ended March 2017.
Bank of India is the ninth bank to be placed under the RBI’s PCA framework.
Under RBI’s new PCA framework, breaching a net NPA ratio of 6% invites action. BoI’s net NPA ratio breached 6% in the March 2016 quarter and stood at 6.90% at the end of March 2017.
Under the old rules, net NPA ratio had to breach 10% for taking action.
The objective of the PCA framework is to facilitate the banks to take corrective measures including those prescribed by the RBI, in a timely manner, in order to restore the banks’ financial health.