RBI’s Board for Financial Supervision has reviewed the performance of the banks and noted that as per its published results for the year ended March 31, 2021, the bank is not in breach of the PCA parameters.
The lender’s annual return on assets turned positive in FY21 for the first time since 2014. It’s net non-performing assets ratio (NPA) fell below the upper tolerance level of 6%.
The bank has given a written commitment that it would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis, RBI said. The bank has also apprised the sector regulator of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.
“Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring,” RBI said.
Earlier in the month, RBI removed UCO Bank from the restrictive corrective framework.
Lenders under the PCA framework are not allowed to lend freely, expand branches and hire staff. They are also not allowed to distribute dividends.