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The RBI has removed which of the following banks from the Prompt Corrective Action Framework (PCAF), in September 2021?

The RBI has removed which of the following banks from the Prompt Corrective Action Framework (PCAF), in September 2021? Correct Answer Indian Overseas Bank

The correct answer is Indian Overseas Bank.

Key Points

  • The RBI has removed Indian Overseas Bank (IOB) from the Prompt Corrective Action Framework (PCAF).
  • The performance of the bank was reviewed by the Board for Financial Supervision.
  • It was noted that as per its published results for the year ended March 31, 2021, the bank is not in breach of the PCA parameters.
  • Earlier, RBI had removed UCO Bank from PCA restrictions.

Additional Information

  • ​What is PCA?
    • PCA (Prompt Corrective Action) is a framework under which banks with weak financial metrics are put under watch by the RBI.
    • The RBI introduced the PCA framework in 2002 for banks that become undercapitalised due to poor asset quality, or vulnerable due to loss of profitability.
    • It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector.
    • There are two type of restrictions, mandatory and discretionary.
    • Restrictions on dividend, branch expansion, directors compensation, are mandatory while discretionary restrictions could include curbs on lending and deposit.

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