Three Banks Taken of PCA Framework
What is PCA?
• The framework allows the RBI to intervene and take corrective action when a bank breaches certain trigger points owing to its worsening financial conditions.
• The framework is being used since 2017.
• It is a supervisory tool to monitor the health of the banking system.
What Are the Trigger Points?
As per the Prompt Corrective Action Framework, the trigger points when RBI takes action are:
Capital to Risk weighted Asset Ratio (CRAR)
• When it is less than 9% and more or equal to 6%
• When it is less than 6% and more or equal to 3%
• When it is less than 3%
Non Performing Assets (NPAs)
• Net NPAs more than 10% but less than 15%
• Net NPAs equal to or above 15%
Return on Assets (ROA)
• Less th