RBI Initiates Prompt Corrective Action On UCO Bank

The Reserve Bank of India (RBI) has initiated so-called prompt corrective action (PCA) against UCO Bank for high bad loans and negative return on assets, the lender disclosed to the stock exchanges on Friday. The move will place various restrictions on the public sector lender including on fresh loans and dividend distribution.

The gross non-performing assets (NPAs) or bad loans of the bank grew to 17.12 percent of gross advances at the end of 2016-17, from the earlier 15.43 percent.

Earlier this week, the RBI had initiated a similar action on IDBI Bank.

These measures are aimed “at improving" performance of the bank and strengthening internal controls, the bank said. "These measures will not adversely impact performance of the bank," the lender said in its exchange filing.

Indian Overseas Bank was put under prompt corrective action in 2015.

Also Read: Regulatory Rules Loom Over 17 India Banks, Moody's ICRA Says

RBI in April had issued a new set of enabling provisions under the revised PCA framework with a clause that if the bank does not show improvement then it could be either be merged or taken over by other bank.

The UCO Bank declared its financial results for the fourth quarter of 2016-17 on Friday. The bank's loss narrowed to Rs 588.19 crore during the March quarter as provisions for bad assets fell. Net loss stood at Rs 1,715.15 crore in the same period last year.

The stock of UCO Bank closed 0.24 per cent down at Rs 41.55 on the BSE.