PCA for NBFCs
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What is the PCA for NBFCs?
- The prompt corrective action or PCA framework was introduced by the RBI for the NBFCs (non-banking finance companies) recently. It is to be applicable to all deposit taking NBFCs in 3 layers: middle, upper and top layers.
- The framework will trigger supervisory intervention by the RBI, at the appropriate time, to help nurse the NBFC back to health and to limit the impact on the overall financial system.
- The framework will be triggered when certain parameters such as bad loans and capital adequacy ratio fall below pre-defined levels. When this happens, the RBI will impose certain restrictions on the NBFC’s activities.
- This framework will be effective from October 2022 onwa
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