They have successfully met capital and bad loan requirements.
The Indian central bank has lifted lending curbs on three out of 11 public sector banks (PSBs) after satisfying regulatory norms, reports The Times of India.
The three lenders, Bank of India (BOI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC), previously fell under the Prompt Corrective Action (PCA) framework which imposes restrictions on lending and prevents banks from expanding. The framework kicks in particularly when banks breach any of the three key regulatory points - capital to risk weighted assets ratio, net non-performing assets and return on assets.
"It has been decided that BoI and BoM which meet the regulatory norms including Capital Conservation Buffer (CCB) and have Net NPAs of less than 6% as per third quarter results, are taken out of the PCA framework subject to certain conditions and continuous monitoring,” the Reserve Bank of India (RBI) said in a statement.
The government has been carrying out massive capital injections to prop up its weakened banks through a mixture of budgetary assistance and helping them make provisions for bad loans.
“Government’s sustained 4R’s (Recognition, Recapitalisation, REsolution and Reform) strategy for banking transformation delivers again [as] 3 better-performing PSBs exit PCA,” said financial services secretary Rajiv Kumar.
Eight public sector banks including Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank still remain under the PCA framework.
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