PCA only to improve banks’ health, says RBI

PCA only to improve banks’ health, says RBI

Context

The Reserve Bank of India (RBI) has once again clarified that prompt correction action (PCA) is imposed to encourage banks to improve their financial health

Backdrop

The reiteration comes in the wake of rumours on social media that some of the banks that are under PCA could be closed down

RBI’s statement

The PCA framework is intended to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger