Q. With reference to the Prompt corrective action (PCA) Framework, consider the following statements regarding:
1.It has been developed by the Securities & Exchange Board of India.
2.A company put under PCA is barred from trading on exchanges.
Which of the statements given above is/are incorrect?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C

Both statements are incorrect.

  • The Reserve Bank of India has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points.
  • Reserve Bank of India (RBI) has recently taken out IDBI Bank from the prompt corrective action (PCA) framework. But it is still subject to certain conditions and continuous monitoring.