India is reportedly planning to infuse new capital in banks that are currently under the central bank’s prompt corrective action (PCA) framework.
According to a PTI report, the Indian Finance Ministry will infuse INR145bn ($2bn) in the banking system over the next few days.
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The primary beneficiaries are expected to be the lenders that are under Reserve Bank of India’s (RBI) PCA framework, sources told the news agency.
Currently, Indian Overseas Bank, Central Bank of India and UCO Bank are under PCA that puts caps on lending operations and management compensation as well as other restrictions.
The report comes days after RBI removed IDBI Bank from the PCA framework, subject to certain conditions.
At the time of announcement, the central bank said: “It was noted that as per published results for the quarter ending December 31, 2020 the bank is not in breach of the PCA parameters on regulatory capital, Net NPA and Leverage ratio.
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By GlobalData“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.”
In the current financial year, the government has allocated INR200bn for state-owned lenders to help them in meeting regulatory requirement.
