UCO Bank shares soared 16 percent intraday on Thursday after the Reserve Bank of India (RBI) removed the lender from its Prompt Corrective Action Framework.
“The performance of the UCO Bank, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in breach of the PCA parameters,” UCO Bank said in a regulatory filing.
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The lender would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis. It has also 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.
The bank’s capital adequacy ratio stood at 14.24 percent as of June 30, 2021.
Santosh Meena, Head of Research, Swastika Investmart Ltd said UCO Bank has been taken out of prompt corrective action framework (PCAF) of RBI Bank and has given a commitment of complying with: Minimum Regulatory Capital (Tier I was at 11.14 percent in FY21), Net NPA (3.94 percent as of FY21), Leverage Ratio (11.2x as of FY21).
"The stock is buzzing today after this news because it is a very positive trigger for the bank as they can grow their business from here. But, there are still lots of concerns for some of the small PSU banks so investors are advised to avoid this stock and focus on SBI from this space which has huge potential to outperform from here. I will also suggest using the current rally as an exit opportunity in UCO bank," said Meena.
Net NPA of UCO Bank has reduced to 3.85 percent as of June 30, 2021, from 4.95 percent as of June 30, 2020, and from 3.94 percent as of March 31, 2021.
At 09:42 am, UCO Bank shares were trading 10.9 percent higher at Rs 14.21 on the BSE.
The stock has been gaining for the last 2 days and has risen nearly 12 percent in the period.