CURRENT AFFAIRS

Detailed explanation-1: -After placing a host of mid-sized public sector banks under the ‘prompt corrective action’ (PCA) framework due to their weak balance sheets, the Reserve Bank of India now seems to have turned its gaze on large banks.

Detailed explanation-2: -The performance of the Central Bank of India, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per the assessed figures of the bank for the year ended March 31, 2022, the bank is not in the breach of the PCA parameters.

Detailed explanation-3: -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-4: -The bank regulator had three state-owned banks under its PCA framework. Indian Overseas Bank and UCO Bank were removed from the watchlist in 2021. RBI had revised the PCA framework for Scheduled Commercial Banks (SCBs), with changes being effective from January 1, 2022.

Detailed explanation-5: -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. Reserve Bank of India uses the PCA framework to keep track of banks that haven’t performed well financially.