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Prompt Corrective Action framework- Bank of India
December 21 , 2017
2401 days
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- 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.
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