Current Affair 1:

News:

The Reserve Bank of India issued a Prompt Corrective Action (PCA) Framework for Primary (Urban) Co-operative Banks (UCBs). The provisions of the PCA Framework will be effective from April 1, 2025.

Capital, Asset Quality and Profitability will be the key areas for monitoring in the revised PCA Framework.

Indicators to be tracked for Capital, Asset Quality and Profitability would be CRAR, Net NPA Ratio (percentage of net NPA to net advances) and net profit, respectively.

A bank will generally be placed under PCA Framework based on the Reported/Audited Annual Financial Results and/or the ongoing Supervisory Assessment made by RBI.

Although supervisory action taken will primarily be based on the criteria specified under the PCA Framework, the Reserve Bank will not be precluded from taking appropriate supervisory action in case stress is noticed in other important indicators/parameters or in case of serious governance issues.

Exit from PCA and Withdrawal of Restrictions under PCA  

Once a bank is placed under PCA, taking the bank out of PCA Framework and/or withdrawal of restrictions imposed under the PCA Framework will be considered:

a) if no breaches in risk thresholds in any of the parameters are observed as per four continuous quarterly financial statements, one of which should be Audited Annual Financial Statement (subject to assessment by RBI); and

b) based on supervisory comfort of the RBI, including an assessment on sustainable improvement in key financials of the bank.

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