Prompt Corrective Action (PCA)

Prompt Corrective Action (PCA) framework was introduced by Reserve Bank of India in December, 2002 under its supervisory framework to maintain sound financial health of banks. Its objective is to facilitate the banks to take corrective measures including those prescribed by the Reserve Bank, in a timely manner, in order to restore their financial health.

  • It involves monitoring of certain performance indicators of the banks as an early warning exercise and is initiated once such thresholds as relating to capital, asset quality etc. are breached.
  • It is intended to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger.

The PCA framework has been in operation since December 2002 and the guidelines of revised version were issued on April 13, 2017.

Some of the schemes introduced by RBI under PCA are:

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