PROMPT CORRECTIVE ACTION (PCA) RBI

PROMPT CORRECTIVE ACTION (PCA) RBI
➢ PCA framework specifies the trigger points or the level in which the RBI will
intervene with their corrective action.
➢ The various parameters that trigger PCA are
1. Capital to Risk Weighted Assets Ratio (CRAR)
2. Net Non-Performing Assets (NPAs)
3. Return on Assets (ROA)
➢ The PCA framework is applicable only to commercial banks and not extended to
co-operative banks and Non-banking financial companies
➢ Eleven of India’s 21 listed government-owned banks are now under PCA
framework due to large bad loans, weak capital levels and low return of assets.
➢ PCA will contribute to the overall improvement in risk management, asset quality,
profitability, efficiency etc. of the banks.

➢ PCA also focus on profit retention, capital augmentation, provision coverage,
diversification of credit portfolio, rationalization of expansion plan and cost control
➢ Bank of India, Bank of Maharashtra and Oriental Bank of Commerce are now out
of the PCA.

After recent merger of BOB, dena bank and Vijaya bank now only 4 banks under PCA