Abstract

In late 2015, India’s central banking institution, the Reserve Bank of India (RBI), took Prompt Corrective Action (PCA) against state-run Indian Overseas Bank (IOB). Three operational parameters had brought IOB on RBI’s radar, Capital to risk weighted assets ratio (CRAR), also called the Capital Adequacy Ratio (CAR) %, Net Non Performing Assets (NPA), and Return on Assets (RoA). Under the new CEO, IOB is looking for a turnaround even as losses mount.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To learn critical ratios to measure performance of banks.
• NPA’s and other factors ailing the Indian banking Industry.
• Action plan by RBI and the government to revive the Industry.

Keywords

Banking Industry, Non Performing Assets, Capital Adequacy Ratio, Return on Assets, Indian Overseas Bank, Reserve Bank of India, Project Indradhanush