UCO Bank removed from RBI’s Prompt Corrective Action

UCO Bank removed from RBI’s Prompt Corrective Action

Shares of UCO Bank rallied as much as 16% during early trade on Thursday after the state-owned lender was put out of PCA watchlist.
The Reserve Bank of India (RBI) yesterday removed UCO Bank from its Prompt Corrective Action Framework (PCA) following improvement in various parameters and a written commitment that the lender will comply with the minimum capital norms.
“On a review of the performance of the UCO Bank, the Board for Financial Supervision on the basis of the published financial results for 2020-21 found that the bank was not in breach of the PCA parameter,” the RBI said in a statement.

The Kolkata-based lender has also provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis.
It has been under PCA since May 2017. The restrictions disable banks in several ways to lend freely and force them to operate under a restrictive environment that turns out to be a hurdle to growth.
UCO Bank has widely underperformed the broader market, gaining merely 10% in the last one year compared to a 52% rise in the benchmark index BSE Sensex.

UCO Bank had posted over a four-fold jump in its net profit to Rs 101.81 crore for the first quarter of the fiscal ended June 30, as bad loans fell significantly.
The lender trimmed its gross non-performing assets (NPAs) significantly to 9.37% of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020. Its net NPAs were down at 3.85% from 4.95%.

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