RBI issues PCA framework to maintain sound financial health of banks

Reserve Bank of India, RBI has issued a Prompt Corrective Action (PCA) framework to maintain sound financial health of banks. In a written reply to a question in the Lok Sabha today, Minister of State for Finance Shiv Pratap Shukla said, it facilitates banks in breach of risk thresholds for identified areas of monitoring including capital, and profitability to take corrective measures in a timely manner.

He said, it is intended to encourage banks to eschew certain riskier activities, improve operational efficiency and focus on conserving capital to strengthen them.

Mr Shukla said, the framework is not intended to constrain the performance of normal operations of the banks for the general public. RBI has placed eleven Public Sector Banks including Bank of India, Dena Bank, Central Bank of India, UCO Bank, IDBI Bank, Oriental Bank of Commerce, Corporation Bank and Allahabad Bank under the PCA framework.