IDBI share price zooms 17%; lender exits RBI’s PCA framework as balance sheet improves

By: |
March 12, 2021 11:24 AM

The Reserve Bank of India (RBI) on Wednesday evening said that IDBI Bank has been taken out of the prompt corrective action (PCA) framework, subject to specific conditions.

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IDBI Bank share price surged as much as 17.12 per cent to Rs 44.80 apiece on BSE on Friday, after the Reserve Bank of India (RBI) removed the bank from the prompt corrective action (PCA) framework, subject to specific conditions. Last year in March, IDBI Bank stock price hit a 52-week low of Rs 17.50 apiece, since then it has soared a massive 156 per cent. So far in the session, a total of 70.11 lakh shares have traded on BSE, while 6.97 crore shares have exchanged hands on National Stock Exchange (NSE). 

The Reserve Bank of India (RBI) on Wednesday evening said that IDBI Bank has been taken out of the prompt corrective action (PCA) framework, subject to specific conditions. According to IDBI Bank, the Board for Financial Supervision (BFS) in its meeting held on February 18, noted that the lender’s fiscal third-quarter results showed that it was not in breach of the PCA parameters on regulatory capital, Net NPA and Leverage ratio.

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“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 bank said in a regulatory filing.

IDBI Bank share price has galloped a massive 32 per cent so far in 2021. The stock is still below its 52-week high of Rs 55.75 per share. The Life Insurance Corporation of India (LIC)-owned lender had been struggling with recoveries from stressed corporate NPAs which led it to be placed under the PCA framework of the RBI in May of 2017. 

IDBI Bank has managed to reduce its net NPA ratio to 1.94 per cent in the third quarter of the current fiscal year. Had the bank classified borrower accounts as NPA after August 31 last year, its pro forma gross NPA ratio and pro forma net NPA ratio would have been 24.33 per cent and 2.75 per cent, respectively.

On Friday, Bank Nifty was trading 0.73% higher at 36,200 points while the Nifty 50 index was just shy of the 15,300 mark.

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