RBI puts Central Bank of India under ‘corrective action’ as bad loans surge

The Reserve Bank of India has initiated “prompt corrective action” (PCA) for state-run Central Bank of India (CBI.NS) over high bad loans and negative return on assets, the lender said in a stock exchange filing on Wednesday.

It did not give details of the corrective action but said, “We believe corrective measures arising out of the PCA will help in improving overall performance of the bank.”

The bank had a net non-performing loans ratio of 10.2 percent, as of end-March.

In April, RBI had tweaked rules for regulatory action on banks, including an over 6 percent net non-performing loans as one of the triggers.

IDBI Bank (IDBI.NS), Dena Bank Ltd (DENA.NS) and UCO Bank (UCBK.NS) are the other lenders that have been placed under corrective action by the regulator due to their high bad loans.