- The Reserve Bank of India (RBI) took three more banks out of the prompt corrective action (PCA) framework, following an improvement in the public-sector banks’ (PSBs) financial ratios after a fresh round of capital infusion in them by the government.
- PCA is a process or mechanism to ensure that banks don’t go bust.Under it, RBI has put in place some trigger points to assess, monitor, control and take corrective actions on banks which are weak and troubled.
- There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and net non performing assets(NPA’s) ratio which should not cross 6%.
- This decision will give boost to the credit growth in the MSME and agricultural sector.
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