Central Bank of India comes out of RBI's PCA framework

The Reserve Bank of India has taken the Central Bank of India out of the Prompt Corrective Action Framework (PCA) restrictions, subject to certain conditions and continuous monitoring.

"The performance of the Central Bank of India, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per the assessed figures of the bank for the year ended March 31, 2022, the bank is not in the breach of the PCA parameters," the banking regulator says in a statement.

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 RBI says.

This comes days after the RBI imposed monetary penalty on three urban co-operative banks for non-compliance with the directions issued by the RBI to urban co-operative banks on exposure and Know Your Customer (KYC) norms.

The Reserve Bank of India had imposed a monetary penalty of ₹1.50 lakh on Dr. Ambedkar Nagarik Sahakari Bank Maryadit, Gwalior. It also imposed a monetary penalty of ₹1.00 lakh on Ravi Commercial Urban Co-operative Bank Ltd., Nagpur and a monetary penalty of ₹25,000 on Nagrik Sahakari Bank Maryadit, Vidisha.

Meanwhile, the central bank has asked Tier 4 urban cooperative banks (UCBs) – lenders with deposits above ₹10,000 crore – to appoint a chief compliance officer by April 1, 2023 as part of its corporate governance standards.

The central bank has told urban cooperative banks under the Tier 3 category – with deposits more than ₹1000 crore and up to ₹10,000 crore – to appoint chief compliance offers latest by October 1, 2023.

The RBI said this circular will be placed in the immediate next meeting of the Board of Directors for information and devising an implementation strategy, under the board’s supervision, in a time-bound manner.

UCBs under Tier 1 — with deposits up to ₹100 crore — and Tier 2 — with deposits over ₹100 crore and up to ₹1,000 crore — shall continue to be governed under the existing guidelines.

The UCBs under Tier 3 and Tier 4 categories will treat the guidelines in the circular as a set of minimum guidelines only and accordingly frame their own guidelines taking into account their corporate governance framework, the scale of operations, risk profile, organisational structure and code of conduct, etc., the banking regulator said.

The RBI also cautioned against "dual hatting." "The CCO shall not be given any responsibility which brings elements of conflict of interest, especially any role relating to business," the central bank said.