Allahabad Bank has set a target of raising about Rs 500 crore by selling its non-core assets such as real estate properties as well as divesting its stakes in subsidiaries and joint ventures. The RBI has moved the lender out of the Prompt Corrective Action (PCA) framework after the government promised to inject Rs 6896 crore. Post this capital infusion, government’s holding in the bank will rise to 91%. However, the bank has to bring down its promoter holding to at least 75% by October 2020, as mandated by market regulator SEBI.
State-owned Allahabad Bank, on Monday reduced its marginal cost-based lending rate (MCLR) by 10 basis points across maturities with effect from March 1. As a result, home, car loans and other retail loans are expected to get cheaper, the bank said. Allahabad Bank was allowed to exit the RBI’s prompt corrective action (PCA) framework on Monday. The RBI had reduced the repo rate by 25 bps to 6.25%. Governor Shaktikanta Das had appealed to banks to lower the lending rates to stimulate economic growth.
The RBI on Tuesday lifted lending curbs on two more public sector banks—Allahabad Bank and Corporation Bank—by removing them from its prompt corrective action (PCA) framework. Private sector lender Dhanlaxmi Bank also is no longer under the PCA framework. Bank of India, Bank of Maharashtra and Oriental Bank of Commerce were taken out of the PCA framework on 31 January. Allahabad Bank and Corporation Bank had recently received Rs 6,896 crore and Rs 9,086 crore respectively as part of fresh capital infusion by the government which helped them shore up their capital and comply with PCA parameters.