With respect to revised PCA framework of RBI, consider the following statements: As per the revised framework, capital, asset and profitability are key areas for monitoring the risk of a bank. Payments banks and small finance banks (SFBs) have been removed from the list of lenders where prompt corrective action can be initiated. Which of the statements given above is/are correct?

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Q. With respect to revised PCA framework of RBI, consider the following statements:
1. As per the revised framework, capital, asset and profitability are key areas for monitoring the risk of a bank.
2. Payments banks and small finance banks (SFBs) have been removed from the list of lenders where prompt corrective action can be initiated.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B

Notes:

Statement 1 is incorrect: As per the 2017 PCA framework, capital, asset quality and profitability were the key areas for monitoring the risk of a bank. The revised PCA framework has removed profitability as a parameter.
Statement 2 is correct

Source: Article