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3 PSU banks out of PCA framework

The Reserve bank of India has notified that 3 banks – Bank of India, Bank of Maharashtra and Oriental Bank of Commerce- which were placed under the prompt corrective action, are now out of this framework. The decision has been taken in view of marked improvements in the capital positions and asset quality of these banks, the central bank said, indicating that these banks now can open branches and extend loans freely. The restrictions have been lifted after these banks provided a written commitment that they would comply with the norms of minimum regulatory capital, net NPAs and leverage ratio on an ongoing basis and apprised the RBI of the structural and systemic improvements they have put in place. The 3 banks were among the 11 public sector banks that were placed under the PCA framework, which put restrictions on them on extending big loans, distributing dividends and expanding the branch networks. Bank of Maharashtra was put under PCA in June 2017 after its net NPA rose to 11.76%. Oriental Bank of Commerce was put under PCA in October 2017 after it reported a net loss of Rs 1094 crore in FY17 and gross NPA rose to 8.9%.  Bank of India came under PCA in December 2017 after its net NPA rose to 6.90% and return on assets slipped to -0.24%.

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