Reserve Bank of India (RBI) has issued a Prompt Corrective Action (PCA) framework to maintain sound financial health of banks. It facilitates banks in breach of risk thresholds for identified areas of monitoring, viz., capital, asset quality (which is tracked in terms of the net Non-Performing Assets ratio) and profitability, to take corrective measures in a timely manner, in order to restore their financial health. Thus, it is intended to encourage banks to eschew certain riskier activities, improve operational efficiency and focus on conserving capital to strengthen them. The framework is not intended to constrain the performance of normal operations of the banks for the general public. RBI has placed eleven PSBs, viz., Dena Bank, Central Bank of India, Bank of Maharashtra, UCO Bank, IDBI Bank, Oriental Bank of Commerce, Indian Overseas Bank, Corporation Bank, Bank of India, Allahabad Bank and United Bank of India under the PCA framework.

This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in a written reply to a question in Lok Sabha today.

Prompt Corrective Action framework places public sector banks under enhanced supervision to restore financial health. Prompt Corrective Action (PCA) framework implements an enhanced supervisory regime for banks breaching thresholds in capital, asset quality (net Non-Performing Assets ratio) and profitability, requiring timely corrective measures to conserve capital, curb riskier activities, improve operational efficiency and restore financial health, while not constraining normal public banking operations; RBI has applied the PCA framework to specified public sector banks identified as breaching those thresholds.