BANKING AFFAIRS

Detailed explanation-1: -As will be revealed from the scheme, a schedule of corrective actions has been worked out based on three parameters, i.e. CRAR, Net NPAs and Return on Assets (RoA) which represent the three important parameters, viz. capital adequacy, asset quality and profitability.

Detailed explanation-2: -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-3: -Prompt Corrective Action (PCA)is a framework introduced by the Reserve Bank of India in 2022. The Prompt Corrective Action framework is a structured early-intervention mechanism for banks with weak financial records due to loss of profitability or poor asset quality.

Detailed explanation-4: -The objective of the PCA Framework is to enable Supervisory intervention at appropriate time and require the Supervised Entity to initiate and implement remedial measures in a timely manner, so as to restore its financial health. The PCA Framework is also intended to act as a tool for effective market discipline.