IDBI Bank taken out of PCA, subject to conditions

RBI has recently declared that IDBI Bank has been taken out of the Prompt Corrective Action (PCA) framework, subject to specific conditions. The bank has given the regulator a written commitment that it will comply with the norms of minimum regulatory capital, bad assets and leverage ratio on an ongoing basis. The exit of IDBI Bank from PCA is a crucial step towards carrying out the government’s bank privatisation programme, as it is one of the lenders identified for sale.

The RBI stated that the performance of IDBI Bank was reviewed by the Board for Financial Supervision (BFS). “It was noted that as per published results for the quarter ending December 31, 2020, the bank is not in breach of the PCA parameters on regulatory capital, Net NPA and Leverage ratio. The bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, Net NPA and Leverage ratio on an ongoing basis and has apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments,” the central bank added.

Taking all the above into consideration, it was decided that the bank be taken out of the PCA framework, subject to certain conditions and continuous monitoring.