Central Bank of India Current Affairs - 2020
The BCG-IBA report EASE Reforms for Public Sector Banks measures the performance of each PSB on 140 objective metrics across 6 themes. The 6 themes are:
- Customer Responsiveness: EASE for customer comfort
- Responsible Banking: Financial stability, governance for ensuring outcomes, and EASE for clean & commercially prudent business
- Credit Off-take: EASE for the borrower and proactive delivery of credit
- PSBs as UdyamiMitra: EASE of financing and bill discounting for MSMEs
- Deepening Financial Inclusion & Digitalisation: EASE through near-home banking, microinsurance and digitalisation
- Ensuring outcomes – HR: Developing personnel for Brand PSB.
Findings of the Report
- Punjab National Bank has been ranked first among public sector banks in the implementation of ‘reforms agenda’, followed by Bank of Baroda and State Bank of India.
- Punjab National Bank with a score of 78.4 out of 100 has been ranked first under the theme of EASE (Enhanced Access & Service Excellence). PNB is followed by BoB (77.8), SBI (74.6), Oriental Bank of Commerce (69), Canara Bank (67.5) and Syndicate Bank (67.1).
- The six Public sector banks which are under PCA framework of the RBI have also been ranked under the Index. The performance of PSBs is as shown Indian Overseas Bank (66.7), UCO Bank (64.1), United Bank of India (60.8), IDBI Bank (60.2), Central Bank of India (55.7) and Dena Bank (53.8).
The government had announced in January 2018 that the government would come out with EASE -Index for ranking of banks aimed at increasing the public accountability of PSBs as independent agencies evaluate and rank PSBs annually on reforms.
The report has been commissioned through Indian Banks’ Association and authored by BCG with Forrester Inc., Kantar IMRB and TransUnion CIBIL as knowledge partners.
Tags: Bank of Baroda • Canara Bank • Central Bank of India • Dena Bank • EASE Index Report
The Reserve Bank of India (RBI) has removed three banks, Dhanlaxmi Bank, Allahabad Bank and Corporation Bank from the PCA framework by moving them out of its weak-bank watchlist.
Basis for the decision of RBI
- The government has infused fresh capital into various banks including some of the banks currently under the PCA framework. As part of the capital infusion, Corporation Bank had received Rs 9086 cr and Allahabad Bank had received 6896 cr.
- Capital Infusion to both of these banks has shored up their capital funds and also increased their loan loss provision to ensure that the PCA parameters were complied with.
- Dhanlaxmi Bank was taken out of the PCA framework, subject to certain conditions and it would be under continuous monitoring, as the bank is found to be not breaching any of the Risk Thresholds of the PCA framework.
Earlier in the year, the RBI had removed the Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC) from the PCA framework. With the removal of Allahabad Bank and Corporation Bank from the list, five PSBs which includes United Bank of India, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank remain under the PCA framework.
PCA: Bone of Contention
The PCA framework had become a bone of contention between the government and the RBI. In India, PCA kicks in when banks breach any of the three key regulatory trigger points namely capital to risk-weighted assets ratio, net non-performing assets (NPA) and return on assets (RoA) whereas globally PCA kicks in only when banks slip on a single parameter of capital adequacy ratio.
The government and independent directors of the RBI board, like S Gurumurthy, are in favour of this practice being adopted for the domestic banking sector as well.