BANKING AFFAIRS

Detailed explanation-1: -The central bank has also released the three types of risk thresholds with the mandatory and discretionary actions. The mandatory actions for risk threshold 1 are restrictions on dividend distribution or remittance of profits and promoters or owners or parents (in the case of foreign banks) to bring in capital.

Detailed explanation-2: -Risk Threshold-2: If capital adequacy falls more than 200 bps but upto 400 bps i.e. more than 8% but less than 6%. iii. Risk Threshold-3: If capital adequacy falls more than 400 bps i.e. less than 6 %.

Detailed explanation-3: -Parameters: The RBI has specified certain regulatory trigger points, as a part of PCA Framework, in terms of three parameters, i.e., Capital to Risk Weighted Assets Ratio (CRAR), net Non-Performing Assets (NPA) and Return on Assets (RoA)

Detailed explanation-4: -RBI had placed 11 state-run banks – Allahabad Bank, United Bank, Corporation Bank, IDBI Bank, Uco Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra – under PCA framework after they breached the risk thresholds.

Detailed explanation-5: -FDIC PCA Framework The five PCA categories are (i) well capitalized, (ii) adequately capitalized, (iii) undercapitalized, (iv) significantly undercapitalized, and (v) critically undercapitalized.