Public sector Allahabad Bank today said the Reserve Bank has put the lender under prompt corrective action framework post an on-site inspection of high NPAs and negative return of assets for fiscal 2016-17.
“We have to inform you that the Reserve Bank of India vide letter dated January 2, 2018 received by the bank on date has placed the bank under Prompt Corrective Action Framework, consequent to the on-site inspection under the Risk Based Supervision Model carried out for the year ended March, 2017,” the bank said in a regulatory filing.
The RBI inspection has revealed high net NPAs (non performing assets) and negative ROA (return on assets) for two consecutive years, it said further.
“The action will contribute to the overall improvement in risk management, asset quality, profitability, efficiency of the bank,” the lender said.
For the fiscal 2016-17, the bank had trimmed its net losses to Rs 313.51 crore against Rs 743.31 crore in 2015-16.
The RBI has initiated similar action against other public sector banks, including IDBI Bank, Indian Overseas Bank and UCO Bank.
The RBI in April had issued a new set of enabling provisions under the revised PCA framework with a clause that if the bank does not show improvement then it could be either be merged or taken over by other bank.