RBI issues new framework for bad loans

The Reserve Bank of India (RBI) has issued a new set of enabling provisions titled ‘Revised Prompt Corrective Action (PCA) framework’ to resolve the problem of banks mounting non-performing assets (NPAs), or bad loans.

The new set of provisions, effective from April 1, 2017 override the existing PCA framework, and are based on the financials of each bank as of March 2017. 
Under the revised framework, if a bank crosses the third level of risk threshold (where a bank’s common equity tier I capital falls below the threshold of 3.625 per cent by 3.125 per cent, or more) it will either be amalgamated or merged, or taken over by another entity.

Takeaways from above News-
  • RBI issued new framework for bad loans named as ‘Revised Prompt Corrective Action (PCA) framework’
  • The head office of RBI is in Mumbai and was formed in 1 April 1935
  • Urjit Patel is the 24th governor of RBI
  • B P Kanungo is the newly appointed Deputy governor of RBI.

If you have any other takeaways, do share with us in the comment section

Source- Business Standard

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