The Reserve Bank of India has placed 11 public sector banks under Prompt Corrective Action restricting lending activities of the banks over the issue of non-performing assets.
List of Banks
- Allahabad Bank
- United Bank of India
- Corporation Bank
- IDBI Bank
- UCO Bank
- Bank of India
- Central Bank of India
- Indian Overseas Bank
- Oriental Bank of Commerce
- Dena Bank
- Bank of Maharashtra
Impact
PCA framework restricts the amount of loans banks can extend, this will definitely put pressure on credit being made available to companies especially the MSMEs. Large companies have access to the corporate bond market so they may not be impacted immediately. Small and medium enterprises will have to bear the brunt due to this move by RBI
What is PCA?
Prompt Corrective Action was initiated by Reserve Bank of India in April 2017. It restricts the bank to indulge in lending activities. Banks under this framework are restricted from opening new branches, staff recruitment and increasing the size of their loan book depending on the risk thresholds set in PCA rules.
