IDBI Bank is the top gainer on the BSE since the opening bell and with good reason too.
The stock opened over 17% higher at Rs.44.80, which is not too far from its 20% UC of the day at Rs.45.90. Volumes have almost doubled up.
On Saturday, the Bank was removed from the Prompt Corrective Action Framework (PCAF), which is almost four years after it was placed in this troubled spot.
The RBI had placed IDBI Bank in May 2017, after it had breached the thresholds for capital adequacy, asset quality (net NPAs was over 13 per cent in March 2017), return on assets and the leverage ratio.
The performance of the Bank was reviewed by the Board for Financial Supervision (BFS) in its meeting held on February 18, 2021. 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. Relevant to note here – the Bank’s NPA has been under 6% for five consecutive quarters.
The bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, Net NPA and Leverage ratio on an ongoing basis and has 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.
And it was based on this that the Bank has been finally allowed an exit.