How Did Central Bank of India Reach This Turning Point?
Central Bank of India, one of India’s oldest public sector banks, was established in 1911. For much of the last decade, it was synonymous with legacy systems, low efficiency, and mounting non-performing assets (NPAs). But since 2019, the bank has quietly undergone a steady transformation.
A key turning point came when it was placed under the Prompt Corrective Action (PCA) framework by the Reserve Bank of India (RBI) in June 2017 due to high NPAs and negative return on assets. The bank remained under PCA until September 2022, when it was finally removed after showing consistent improvement in asset quality and profitability. This marked the beginning of a new growth phase for Central Bank of India.
What Are the Core Business Segments of Central Bank of India?
Central Bank of India primarily operates across:
- Retail Banking: Home loans, personal loans, gold loans, and more.
- Corporate Banking: Working capital, term loans, trade finance.
- Agriculture & MSME Finance: Major focus under priority sector lending.
- Digital Banking: Mobile banking, net banking, UPI, and card services.
It has a wide branch network with over 4,500+ branches and 3,600+ ATMs across India. As a PSU bank, it plays a key role in government subsidy disbursements and financial inclusion schemes.
What Do the Financials Look Like After Its Turnaround?
| Metric | FY21 | FY22 | FY23 | FY24 (Est.) |
|---|---|---|---|---|
| Net Profit (₹ Cr) | -888 | 1,045 | 1,582 | 2,200 |
| Net Interest Margin (%) | 2.2 | 2.5 | 2.8 | 3.0 |
| Gross NPA (%) | 16.5 | 14.8 | 8.4 | 4.95 |
| Net NPA (%) | 7.3 | 5.8 | 2.3 | 1.75 |
| CASA Ratio (%) | 48.5 | 47.6 | 44.6 | 42.2 |
| ROA (%) | -0.24 | 0.18 | 0.36 | 0.62 |
| ROE (%) | -6.1 | 3.2 | 6.3 | 11.2 |
Source: Company filings, Screener
How Does Central Bank of India Compare with PSU Peers?
| Bank | Market Cap (₹ Cr) | P/E Ratio | ROE (%) | Gross NPA (%) |
|---|---|---|---|---|
| Central Bank of India | 38,500 | 8.2 | 11.2 | 4.95 |
| Bank of India | 45,200 | 6.7 | 10.5 | 4.30 |
| UCO Bank | 35,000 | 8.9 | 9.8 | 4.90 |
| Indian Bank | 53,300 | 7.4 | 12.5 | 4.20 |
| Bank of Maharashtra | 48,900 | 9.1 | 14.0 | 2.9 |
Central Bank has caught up with mid-sized PSU peers in most metrics but still lags behind the best-in-class players in terms of digital adoption and ROE.
We have done blog on Banks, follow these links to head over: SBI, HDFC
What Recent News and Updates Are Driving the Stock?
- Strong Q3 FY25 Results: Net profit rose 33% YoY to ₹556 Cr. Credit growth was 14.2%, and GNPA dropped to 4.95%.
- Focus on Retail & MSME: Loan growth in retail and MSME segments has driven margins higher.
- Capital Adequacy: CRAR stood at 14.56% as of December 2024, well above the RBI norm of 11.5%.
- Digital Push: Central Bank launched its revamped mobile app and UPI stack in early 2024, aiming for higher digital transactions.
- Government Backing: Being a PSU bank, it enjoys sovereign support — a confidence booster for long-term investors.
Source: Moneycontrol
What Are the Strengths of Central Bank of India?
- Turnaround Track Record: From PCA to profitability in 5 years.
- Low Valuation: P/E below 9 despite improving profitability.
- Improving Asset Quality: Consistent reduction in NPAs.
- Strong Branch Network: Pan-India reach boosts CASA.
- Solid Government Backing: Access to capital support if needed.
What Are the Risks to Consider?
- High Competition: Faces pricing pressure from private banks.
- Slow Tech Adoption: Still behind leaders like SBI or Canara in digital.
- Cyclicality: Sensitive to interest rate cycles and credit growth trends.
- Volatile ROA: Still under 1%, which limits valuation expansion.
What’s the Stock Outlook Going Forward?
As of April 2025, Central Bank of India share price is around ₹34.5, up nearly 3x from its 2020 lows. Analysts project further upside if the bank sustains earnings momentum and credit growth.
| Year | Share Price Range (₹) | Key Driver |
|---|---|---|
| 2020 | 11–14 | PCA overhang |
| 2022 | 18–23 | Exit from PCA |
| 2024 | 28–35 | Profitability & NPA improvement |
| 2025 YTD | 34–38 | Strong Q3 earnings & digital push |
Final Verdict: Is Central Bank of India Built to Last?
From a fragile PSU on RBI’s watchlist to a restructured lender with improved earnings, Central Bank of India has demonstrated a bold 5-year revival. With improving return ratios, better credit underwriting, and consistent profitability, it now commands serious attention among banking and PSU stock investors.
Still, the bank must continue digital transformation and boost retail franchise quality to catch up with leaders like SBI or Indian Bank.
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Disclaimer: This article is for informational purposes only. It does not constitute financial advice or investment recommendation.
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