CBI is out of mess, stage set for PCA exit: CEO

After reporting profit for three consecutive quarters, Central Bank of India is out of mess with sharp reduction in net bad loans, revamping of working and human resources systems. Mumbai-based public sector bank expects to report profit in fourth quarter, setting stage for exit from Prompt Corrective Action (PCA) regime, according to its outgoing chief executive Pallav Mohapatra.

His innings at state-owned bank ends today. Matam Venkata Rao, the new MD & CEO, he will take charge on March 1. Central Bank shares closed 2.68 per cent lower at Rs 19.24 at BSE.

Mohapatra said in FY20 the bank made profit for three quarters, but in the fourth quarter it had booked loss on rise in provision for exposures and retirement obligations on fall in interest rates. The bank made profits for three consecutive quarters in FY21.

"This year, the lender made higher provisions even for the wage settlement also and feels Q4FY21 will not be like Q4FY20. The return on assets is also positive (0.19 per cent)," Mohapatra added.

According to a presentation filed with BSE, in line with the Supreme Court interim order, no new non-performing asset (NPAs) were recognised since September 1, 2020. By factoring in Supreme Court verdict its net NPAs stood at 4.73 per cent as of December 31, 2020. Assuming absence of court verdict, the pro forma net NPAs were 6.58 per cent in December 2020.

Reserve Bank of India had placed Central Bank of India under PCA regime in June 2017 due to high net non-performing assets and negative return on assets. Its Net NPAs stood at 10.2 per cent at end of March 2017. The lender posted net loss of Rs 2,439 crore in 2016-17 mainly on account of higher provisioning. PCA framework places many restrictions on banks, including on lending, management compensation and directors' fees.

Mohapatra said the bank is not feeling the pinch of doing business on account of PCA.

Its advances were at Rs 1,80,856 crore in December 2020 (Rs 1,53,008 crore on March 2017) and deposits were at Rs 3,23,872 crore in December 2020 as against Rs 2,96,671 crore in March 2017). Thus total business was Rs 5,04,728 crore in December 2020, up from Rs 4,49,679 crore in March 2017, according to BSE filing.