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Prompt Corrective Action Framework

Prompt Corrective Action Framework:

Reserve Bank of India has removed the Central Bank of India from its Prompt Corrective Action Framework (PCAF) after the lender showed improvement in various financial ratios, including minimum regulatory capital and net non-performing assets (NNPAs).

  • The Prompt Corrective Action norm is a supervisory tool and is imposed when a bank breaches certain regulatory thresholds on capital to risk weighted assets ratio (CRAR), net NPAs, and return on assets (RoA).
  • The RBI imposed PCA norms on the bank in June 2017 due to its high net NPA and negative return of assets (RoA).
  • After reviewing the performance of the Central Bank of India, RBI decided to remove the restrictions on the bank.
  • The bank has provided a written commitment that it would comply with the norms of minimum regulatory capital, net NPA, and leverage ratio on an ongoing basis.