Bank of India, OBC, Bank of Maharashtra may exit PCA framework before year ends

The next tranche of bank recapitalisation bonds worth Rs 28,000 crore is likely to be issued latest by December 28, sources told CNBC-TV18.

Sources said that three banks —  Bank of India, Oriental Bank of Commerce, Bank of Maharashtra — may exit from the prompt corrective action (PCA) framework post the approval for supplementary recap bond.

Syndicate Bank, which is not in the PCA framework, said that they haven't yet heard formally from the government regarding the exact amount of capital infusion.

However, the sources said Syndicate Bank may be infused with Rs 1,600 crore and Bank of Maharashtra with around Rs 4,498 crore.

Mrutyunjay Mahapatra, Managing Director and Chief Executive Officer, Syndicate Bank, said: "If the recapitalisation amount is around Rs 1,600 crore, it would be an adequate amount for the bank. It would raise their capital adequacy ratio by 1 percent". He also clarified that the net NPAs would come down through recoveries and not through this recapitalization money.

Meanwhile, Alekh Rout, executive director at Bank of Maharashtra, said "Rs 4498 crore amount would be adequate for the bank and help the bank come out of PCA".

"Post recapitalisation, the capital adequacy ratio would go above 11 percent, said Rout and the net NPA would to come down from 10.61 percent to around 6 percent."

Source: CNBC-TV18