The Reserve Bank of India (RBI) has taken Indian Overseas Bank (IOB) out of the PCA restrictions, subject to certain conditions and continuous monitoring.
The Chennai headquartered public sector bank (PSB) was put under PCA in 2015.
Now, among public sector banks, only Central Bank of India remains under the PCA.
About Prompt Corrective Action (PCA) Framework
- Prompt Corrective Action (PCA) Framework refers to the central bank’s watchlist of weak banks. The regulator imposes restrictions like curbs on lending on such banks.
- PCA Framework was introduced in December 2002 as a structured early intervention mechanism. The revised PCA Framework was issued by the RBI on April 13, 2017, and implemented with respect to banks’ financials as of March 31, 2017.
- The RBI has specified certain regulatory trigger points with respect to three parameters for PCA framework, i.e., capital-to-risk weighted assets ratio (CRAR), net non-performing assets (NPA) and return on assets (RoA) for the initiation of the process.
- The PCA Framework applies only to commercial banks and does not cover cooperative banks and non-banking financial companies.
(Source: Moneycontrol.com)
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