"I don’t foresee any hurdle and remain hopeful that we will get the regulators’ approval to come out of PCA," UCO bank managing director and CEO A K Goel told PTI when asked about the issue of the latest capital infusion through zero-coupon bonds.
State-owned UCO Bank is hopeful of coming out of the Prompt Corrective Action (PCA) framework very soon, a top bank official said on Monday.
The government in the last round had infused Rs 14,500 crore of equity in Central Bank of India, Indian Overseas Bank, Bank of India, and UCO Bank by issuing non-interest-bearing, non-transferable bonds to these state-owned lenders.
“I don’t foresee any hurdle and remain hopeful that we will get the regulators’ approval to come out of PCA,” UCO bank managing director and CEO A K Goel told PTI when asked about the issue of the latest capital infusion through zero-coupon bonds.
The bank had also met the other major criteria including net NPA norm, Goel said. Net NPA was at 3.4 per cent in March quarter against requirement of below six per cent. Return on Asset is also positive at Rs 167 crore and latest leverage ratio stood at 4.53 against a requirement of four per cent, he said.
PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital, and quantum of the non-performing asset.
He said the bank had already written to RBI requesting it to withdraw PCA after the capital infusion.
PCA restrictions disable the bank in several ways to lend freely and force it to operate under a restrictive environment that turns out to be a hurdle to growth.
UCO Bank had received Rs 2,600 crore and post that capital adequacy ratio of the bank rose to 13.74 per cent against a requirement of 10.8 per cent and of which tier-I had risen to 11.14 per cent up from the mandatory requirement of 8.8 per cent.
“We have allotted it to the government with prior approval of the RBI,” Goel said.
Meanwhile, Goel said, the bank is reaching out to clients requiring restructuring under the RBIs second framework to support Covid-hit individuals and corporate.
“We have put data of all customers on the internet and no one is required to visit the bank to demand to restructure. We are fully prepared to support each and every one hit with a pandemic under the regulatory framework,” Goel said.
In the first Covid framework only a total of Rs 400 crore worth of loans took moratorium but this time the amount will be higher, he estimates.