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Prompt Corrective Action Framework
December 17 , 2021
1075 days
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- Reserve Bank of India (RBI) has brought non-banking finance companies (NBFCs) under the ambit of prompt corrective action (PCA) framework.
- Under the PCA framework, NBFCs will face restrictions when parameters such as capital adequacy ratio, non-performing assets, and Tier 1 capital will fall below the stipulated levels.
- The Banks are already covered under the framework.
- This framework will be applicable for all deposit-taking NBFC.
- However, it will exclude government NBFCs, housing finance companies, primary dealers and other non-deposit taking NBFCs in the upper, middle, and top layers.
- The PCA framework for NBFCs will be implemented from October 1, 2022.
- This is done on the basis of the financial position of NBFCs on or after March 31, 2022.
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