The Hong Kong Monetary Authority has toughened its supervision on India-based Allahabad Bank's local branch on account of its capital position.
The regulator told the lender's branch to maintain liquid assets equivalent to 100% of unpledged deposits and to not incur additional nonbank credit exposures, according to a June 12 filing. The regulator also instructed the branch to not proactively solicit customer deposits in the city. However, transactional deposits, including pledged deposits for commercial loans, are excluded from this arrangement.
Lastly, the branch was told to maintain a position of "net due to" its head office, other branches, as well as any direct or indirect units and associates of the bank.
Allahabad Bank's capital-to-risk-weighted-assets ratio stood at 8.69% as of March 31, down from 11.27% as of Dec. 31, 2017.
Earlier in 2018, Allahabad Bank was placed under prompt corrective action by the central bank after it was found to have posted high levels of net nonperforming assets and negative return on assets for two straight years.
