Need for Transparency in RBI’s Prompt Corrective Action Framework

The RBI recently took out the Central Bank of India from the Prompt Corrective Action Framework:

The performance of the Central Bank of India, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per the assessed figures of the bank for the year ended March 31, 2022, the bank is not in the breach of the PCA parameters. The bank has provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.

Taking all the above into consideration, it has been decided that Central Bank of India is taken out of the PCA restrictions subject to certain conditions and continuous monitoring.

I had written earlier that RBI should be more transparent in reporting on pca framework. I had argued the regulaor should have kid of a dashboard which lists the banks in pcaf and the various metrics on which select banks are in and out of the list. Some critical information may not be shared but there is a need for more clarity on which banks are in and out of pca and the basis for the in and out of the list.

 

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