RBI LIFTS CURBS ON THREE PSBS

GS 3: Economy

Why in News?

The Reserve Bank of India (RBI) has decided to allow three public sector banks — Bank of India, Bank of Maharashtra and Oriental Bank of Commerce — to exit the Prompt Corrective Action (PCA) framework following capital infusion by the government and a decline in net non-performing asset ratio.

Highlights:

  • These banks have provided a written commitment that they would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis.
  • The government has assured that the capital requirements of these banks will be duly
    factored in while making bank-wise allocations during the current financial year.
  • It will boost credit growth.

What is PCA?

  • To ensure that banks don’t go bust, RBI has put in place some trigger points to assess, monitor, control and take corrective actions on banks which are weak and troubled. The process or mechanism under which such actions are taken is known as Prompt Corrective Action, or PCA.
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