IDBI Bank Shares Jump Over 17% On RBI's PCA Framework Exit

Shares of IDBI Bank in intra-day trade today jumped over 17% to day's high of Rs. 45 per share on the NSE. This is after the RBI removed IDBI Bank from prompt corrective action (PCA) framework after the bank showed improvement in overall performance. With this relaxation, the lender will be able to augment its business and also paves the way for strategic sale by the centre that has a 45.48 percent stake in the lender.

IDBI Bank was put under the PCA framework in May 2017. And all banks under PCA are closely monitored in terms of financial parameters including asset quality, capital ratios and and profitability. For IDBI bank, some of the stipulated financial parameters such as asset quality reached to over 13 percent in March 2017, similar was the situation with other metrics such as capital adequacy etc.

The Board for Financial Supervision (BFS) in its meeting held on February 18, 2021 assessed the performance of the lender.

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," the RBI said. Also, the lender has given in writing that it would stick to the minimum regulatory capital requirements, net NPA and leverage ratio on an ongoing basis and has informed the central bank 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 said.

And in view of all this, it has been decided that IDBI Bank bank be taken out of the PCA framework, subject to some of the conditions and continuous monitoring, said the bank in a release.

At the time of writing this copy at around 10:45 am, the stock of IDBI Bank quoted higher by 12.55% at Rs. 43.05 per share.

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