It said the action followed an onsite inspection by the RBI.
“This is in view of high net NPA, insufficient CET1 capital and negative ROA for two consequent years,” the government-controlled bank said.
Banks placed under the PCA framework will face various restrictions depending on how bad the RBI determines its condition to be. Other banks in the program include Indian Overseas Bank, UCO Bank, IDBI Bank and Dena Bank.
Under Threshold 1 — lowest risk category — banks are prevented from repatriating profits to their owners and promoters are required to infuse capital.
Under Threshold 2, banks are prevented from opening new branches and are forced to set apart higher provisions than usual to cover for possible defaults.
Finally, in the highest category, RBI also curbs the levels of salaries and compensation drawn by top management and directors.
The RBI has also issued a list of common discretionary actions to be undertaken by the bank in such cases.
“This action (by the RBI) will contribute to the overall improvement in risk management, asset quality, profitability, efficiency etc of the bank,” Bank of India said.