Private lender IDBI Bank has now been removed from the prompt corrective action (PCA) by the Reserve Bank of India after bank removed its finances and credit profile, said the banking regulator. With this, the rules for the lender pertaining to business expansion have been relaxed.
This also paves the way for the bank’s strategic divestment by the Government of India, which holds 45.48 percent stake.
The RBI in a statement said its board for financial supervision had reviewed the performance of IDBI Bank at its meeting on February 18. According to published results for the quarter ended December 31, 2020, the bank is not in breach of the PCA parameters on regulatory capital, net non-performing assets (NPAs), and leverage ratio.
IDBI Bank was put under the PCA framework since 2017. The PCA limits high lending and expenditure for a lender and calls for a plan for turnaround.
After being put under the PCA, the bank, in a written commitment, stated that it would adhere to the norms of minimum regulatory capital, net NPAs, and leverage ratio on an ongoing basis.
The lender has informed RBI of the structural and systemic improvements has been put in place to ensure the meeting of its commitments.