RBI said imposing PCA is for Banks growth.

TNPSC Current Affairs - December 2017 by TNPSC Guru 

Reserve Bank of India has once again insisted that prompt correction action (PCA) is enforced to Indian Banks to improve bank’s financial health.

What is Prompt Correction Action (PCA). 

• PCA is an RBI System in which it will take corrective action against the Indian Banks when the Bank’s financial conditions worsen below certain limits.
• For this RBI has given certain threshold limit to the banks,  in that RBI will intervene the Banks when the banks financial condition worsen below certain limits.
• The limits are based on  CRAR (Capital to Risk weighted Asset Ratio), NPA (Net Non-Performing Assets)  and RoA(Return on Assets).
• If the PCA implemented, then there will be halting branch expansion, limiting lending limit, stopping dividend payment, audit, restructuring operation and may RBI can supersede banks board.
• In April 2017 RBI has revised its PCA Framework . Till now 10 Indian banks namely  United Bank of India, Bank of India, Central Bank of India,  Bank of Maharashtra, UCO Bank, Corporation Bank, Oriental Bank of Commerce, Dena Bank IDBI Bank and Indian Overseas Bank came under PCA.
• PCA is applicable only for commercial bank , it is not applicable for co-operative banks, non-banking financial companies (NBFCs) and Micro finance Institutions (MFIs).