The Reserve Bank of India (RBI) has initiated PCA (Prompt Corrective Action) for state-run UCO Bank over its high bad loans and negative return on assets, UCO Bank said on Friday.
RBI, vide their letter dated May 5, has initiated prompt corrective action for UCO Bank in view of high NPA and negative RoA. These measures aim at improving performance of the bank and to strengthen internal controls of the bank,” UCO Bank said in a late evening BSE filing.
“There would be check on management compensation and directors’ fees as well as the sector regulator has invoked prompt corrective action (PCA) for the bank, aiming to bring it back on recovery path,” an official of the bank said.
Notably, earlier this month IDBI Bank has said the central bank initiated PCA against it. It has become the second lender to face business restrictions after IDBI Bank following RBI’s revision of its PCA framework last month.RBI has been on a mission to clean up the banking system which saw a surge in stressed assets.
Kolkata-based UCO Bank’s asset quality worsened further in the March quarter last fiscal as its gross non-performing assets (NPAs) in absolute term rose close to 8% y-o-y to Rs. 22540.95 crore from Rs. 20907.73 crore for the corresponding quarter previous fiscal, according to a BSE filing on Friday. Its gross NPAs soared by 1.6% on a quarter-on-quarter basis from Rs. 22181.26 crore in the December quarter.
The public sector lender has managed to bring down losses to Rs 588 crore in the fourth quarter of 2016-17 from Rs 1,715 crore in the same period of last financial year.The loss for 2016-17 also came down to Rs 1,851 crore from Rs 2,799 crore in the year-ago period.
Profit on sale of Investment increased to Rs 1,241crore as on March, 2017 against Rs 707 crore a year ago. Analysts say more lenders could come under central bank curbs as the regulator strives to clean up bad loans of $150 billion in the sector.