RBI introduced the PCA framework to improve the financial conditions of UCBs
- RBI introduced the PCA framework to improve the financial conditions of UCBs.
- For weak urban cooperative banks (UCBs), the Reserve Bank of India (RBI) has approved a Prompt Corrective Action (PCA) framework.
- This Prompt Corrective Action (PCA) framework will be applicable to urban co-operative banks (UCBs), with deposits above ₹100 crore.
- Under the PCA framework, a financially unsound and ill-managed UCB can be brought under this.
- If a UCB breaches the risk thresholds related to capital and profitability, then it can be brought under the PCA.
- Currently, there are 1500 UCBs in the country, which are categorized into four tiers.
- The main objective of the PCA is to enable supervisory intervention at an appropriate time.
- The provisions of the PCA Framework will be effective on April 1, 2025.
