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RBI triggers corrective action on BoI, United Bank of India on NPA worries
December, 21st 2017

The Reserve Bank of India has imposed certain restrictions on Bank of India and United Bank of India due to sharp rise in nonperforming loans and erosion in capital. On Wednesday, both banks said that RBI triggered prompt corrective action (PCA) wherein the regulator monitors their performance.

With this as many as 10 commercial banks are facing restrictions on banking activities. Bank of India said the PCA was triggered in view of bank's high net NPA, insufficient common equity tier-1 capital and negative returns on assets for two consequent years. United Bank of India said PCA was triggered high net non-performing assets, low leverage ratio and requirement to raise capital, based on the assessment of the bank's position as on March 31, 2017.

ET had in its report on May 19 highlighted the possibility of RBI action on the bank.

Last week, RBI placed similar restrictions on Corporation Bank. In the past, the central bank had put curbs on Oriental Bank of Commerce, Dena Bank, Central Bank of India, IDBI Bank, Indian Overseas Bank, Bank of Maharashtra and UCO Bank. "The action points focus on profit retention, capital augmentation, provision coverage, diversification of credit portfolio, rationalisation of expansion and cost control," UBI said.

 

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