Shares of Allahabad Bank, Corporation Bank and Dhanlaxmi Bank surged in early morning deals after the Reserve Bank of India (RBI) took them out of the Prompt Corrective Action (PCA) framework and allowed them to restart normal lending activities and expansion of businesses.

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Allahabad Bank rose 6.15 percent at Rs 45.45 per share on BSE, whereas, Corporation Bank advanced 10 percent at Rs 31.30 per share. Dhanlaxmi Bank surged 10 percent at Rs 15.30 per share. In comparison, Sensex was at 36,246.68, higher by 272.97 points.

The RBI had placed 11 PSU banks and one private bank under PCA framework last year. The central bank has now lifted PCA curbs on six banks.

According to the RBI, "Of these banks, the Board for Financial Supervision (BFS) noted that Allahabad Bank and Corporation Bank had received Rs 6,896 crore and Rs 9,086 crore respectively. This has shored up their capital funds and also increased their loan loss provision to ensure that the PCA parameters were complied with."

"The two banks have also made the necessary disclosures to the stock exchange that post infusion of capital, the CRAR, CET1, Net NPA and Leverage Ratios are no longer in breach of the PCA thresholds. The banks also apprised RBI of the structural and systemic improvements put in place to maintain these numbers," it said.

For Dhanlaxmi Bank, the RBI did not find the bank breaching any of the Risk Thresholds of the PCA framework, and so it has been taken out from the PCA too.

However, there are still five banks reeling under the PCA framework- United Bank of India, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank. Thus, these 5 will not be able to lend money and expand their operations.

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First Published:Feb 27, 2019 10:14 AM IST