RBI Released Revised PCA Framework

Current Context: The Reserve Bank of India (RBI) has released revised Prompt Corrective Action (PCA) framework. It is released for banks to have supervisory intervention at correct and appropriate time.

• The revised PCA framework will act as an effective tool for gaining market discipline
• In the revised PCA framework, Capital, asset quality and leverage are the key areas for monitoring
• It will be effective from 1st Jan 2022
• Last it was revised in April 2017
• It will be applicable to the banks operating in India which will also include foreign banks operating through branches or subsidiaries based on breach of risk thresholds of identified indicators.
• The framework defines various conditions to exit from PCA and withdrawal of restrictions.
• When a bank is included in PCA framework, numerous restrictions are imposed on it. The restrictions are imposed on dividend distribution and remittance of profits, bringing in the capital (in the case of foreign banks), branch expansion, and capital expenditure.

Question:

Ques: 1: From when will be revised PCA Framework become effective?
a. 1st April 2022
b. 1st Jan 2022
c. 1st July 2022
d. 1st Sep 2022