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Showing posts from October 25, 2018

RBI may Relax PCA Rules for State Banks

The Reserve Bank of India may consider relaxing its prompt corrective action (PCA) framework for loss-making banks, marking a significant shift in its stance, said a senior government official. Banks under PCA face several restrictions, including on lending, till they are nursed back to health. The government has said that credit disbursement has suffered as a number of banks are under PCA. However, the government expects some lenders to come out of the PCA framework on their own after recent recoveries made through the bankruptcy process, said the official, who did not wish to be identified. At present, there are 11 banks under the PCA framework and the minimum common equity Tier I ratio as prescribed by RBI stands at 5.5% against 4.5% under Basel III norms. “These issues were discussed in the RBI’s board meeting,” said the official. Bank credit was up 12.5% on September 28 from a year ago. The RBI stoutly defended the PCA framework in the past. Earlier this month RBI’s deputy governo…