Denying all the rumours pertaining to the closures of the Public Sector Banks (PSBs), Reserve Bank of India (RBI) said that the Prompt Corrective Action (PCA) framework is implemented to rectify the operations of the banks.
“The PCA framework is not intended to constrain normal operations of the banks for the general public,” said the bank.
It further said that the placing the banks in PCA framework will not have any impinge on their normal operations, said the RBI.
The RBI’s clarification comes in the wake of media reports pertaining to the closure of some PSBs, post their being placed under the PCA framework.
The apex bank termed the PCA as a tool to maintain the sound financial health of banks.
“This measure will help them in monitoring certain performance indicators of banks as an early warning exercise and is initiated once such thresholds as relating to capital, asset quality, etc., are breached,” said the bank.
According to the central bank, the PCA framework is based on the ‘to act before it’s too late’ principle, based on RBI’s report on Trends and Progress of Banking in India.
