Prompt Corrective Action (PCA) Scheme Avoiding Failure of Bank & NBFC

Dr. Renu Sharma

doi:10.36948/ijfmr.2022.v04i03.062

Prompt Corrective Action (PCA) Scheme Avoiding Failure of Bank & NBFC

Author(s)	Dr. Renu Sharma
Country	India
Abstract	In all countries the banking system is under monitoring and control of one regulator along with central government of that country. All autonomy of the banks is regulated by Central bank of the country, Reserve Bank of India in case of India. The health of the banks is very sensitive and micro parameter but few parameters to assess the health of a bank are Capital adequacy (CRAR), Return on Assets (RoA) and NPA level, when we talk about GNPA it is ratio of gross nonperforming assets with total outstanding loans if provision against NPA assets is subtracted the figure will come out NNPA (Net NPA). After long considerations, deliberations, comments of bank and other stake holders RBI applied the trigger level of these parameters as PCA application. RBI decided the mandatory and discretionary actions against banks at various trigger levels of three parameters CRAR, NPA and RoA. All trigger levels for separate categories like PSBs, old private banks, new generation private Banks and foreign bank, all actions mandatory and discretionary are applied in PCA by RBI. As the RRBs are also systemically important financial system later on PCA was applied to RRBs also. RBI also applied PCA to NBFC (with certain Exceptions) on the inspection of balance sheet as at 31.03.2022 with effect from 1 October 2022.
Keywords	PCA, Prompt Corrective Action, FSAP, Financial Stability Assessment Programme, FDIC, Federal Deposit Insurance Corporation, RTC, Resolution Trust Corporation, SAIF, Savings Association Insurance Fund, FSLIC, Federal Savings and Loan Insurance Corporation, SSMM, Special Supervisory Monitoring Meetings, NBFCs-D, Non-banking Finance Company Deposit Taking, NBFCs-ND, Non-banking Finance Company Not Deposit Taking, NPIs, Non-erforming Investment
Field	Sociology > Economics
Published In	Volume 4, Issue 3, May-June 2022
Published On	2022-05-28
Cite This	Prompt Corrective Action (PCA) Scheme Avoiding Failure of Bank & NBFC - Dr. Renu Sharma - IJFMR Volume 4, Issue 3, May-June 2022. DOI 10.36948/ijfmr.2022.v04i03.062
DOI	https://doi.org/10.36948/ijfmr.2022.v04i03.062
Short DOI	https://doi.org/10/gqr48t

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Prompt Corrective Action (PCA) Scheme Avoiding Failure of Bank & NBFC

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