Consider
the following statements about Prompt
Corrective Action (PCA)
Framework:
1.It
was introduced by the Reserve Bank of India.
was introduced by the Reserve Bank of India.
2.It
extends to all the commercial, regional rural banks (RRBs), Co-operative banks
functioning in India.
extends to all the commercial, regional rural banks (RRBs), Co-operative banks
functioning in India.
3.PCA
indicates poor employability of Banking sector.
indicates poor employability of Banking sector.
Choose
the correct statement(s) from above
A)Both
1 and 2
1 and 2
B)1 Only
C)1, 2
and 3
and 3
D)Both
1 and 3
1 and 3
Answer – Option B
Explanation – PCA is a framework under which banks with weak financial metrics (capital to risk weighted assets ratio (CRAR), net NPA, Return on Assets (RoA) and Tier 1 Leverage ratio) are put under watch by the RBI.
The RBI introduced the PCA framework in 2002 as a structured
early-intervention mechanism for banks that become undercapitalised due
to poor asset quality, or vulnerable due to loss of profitability.
early-intervention mechanism for banks that become undercapitalised due
to poor asset quality, or vulnerable due to loss of profitability.
The PCA framework is applicable only to commercial banks and not to
co-operative banks and non-banking financial companies (NBFCs).
co-operative banks and non-banking financial companies (NBFCs).
PCA doesn’t indicate Employability of Banks.