{"id":86417,"date":"2020-01-08T16:16:47","date_gmt":"2020-01-08T10:46:47","guid":{"rendered":"http:\/\/factly.forumias.com\/?p=12795"},"modified":"2020-01-08T16:16:47","modified_gmt":"2020-01-08T10:46:47","slug":"stressed-urban-cooperative-banks-to-face-pca-like-curbs","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/stressed-urban-cooperative-banks-to-face-pca-like-curbs\/","title":{"rendered":"Stressed urban cooperative banks to face PCA-like curbs"},"content":{"rendered":"\n<p><strong>News:<\/strong>The Reserve Bank of India has revised its supervisory framework for urban co-operative banks(UCBs) to expedite resolution of UCBs experiencing financial stress.<br><\/p>\n\n\n\n<p><strong>Facts:<\/strong><br><\/p>\n\n\n\n<p><strong>About the revised framework:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The framework imposes restrictions on urban cooperative banks(UCBs) for deterioration of financial position in line with the prompt corrective action(PCA) framework that is imposed on commercial banks.<\/li><li>The framework was revised in the backdrop of recent crisis at the PMC Bank.<\/li><\/ul>\n\n\n\n<p><strong>Features of the framework:<\/strong>Under this revised Supervisory Action Framework (SAF),UCBs will face restrictions for worsening of three parameters:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>when net non-performing assets exceed 6% of net advances,<\/li><li>when they incur losses for two consecutive financial years or have accumulated losses on their balance sheets, and<\/li><li>if the capital adequacy ratio falls below 9%.<\/li><\/ul>\n\n\n\n<p><strong>What will happen if UCBs breach the parameters?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>UCBs may be asked to submit a board-approved action plan to correct the situation like reducing net NPAs below 6%, etc.<\/li><li>The board of the UCB may be asked to review the progress under the action plan on quarterly\/monthly basis and submit the post-review progress report to the RBI.<\/li><li>The RBI can impose restrictions on declaration or payment of dividend or donation without prior approval if any one of the above mentioned parameters is breached.<\/li><li>The RBI may also seek a board-approved proposal for merging the UCB with another bank or converting itself into a credit society if CAR falls below 9%.<\/li><li>The RBI may also consider the issue of show-cause notice for cancellation of banking licence when continued normal functioning of the UCB is no longer considered to be in the interest of its depositors\/public.<\/li><\/ul>\n\n\n\n<p><strong>Additional information:<\/strong><br><\/p>\n\n\n\n<p><strong>About Prompt corrective action(PCA):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Prompt corrective action(PCA) is a framework under which commercial banks with weak financial metrics are put under watch by the RBI.<\/li><li>The RBI introduced the PCA framework in 2002 as a structured early-intervention mechanism for banks that become undercapitalised due to poor asset quality, or vulnerable due to loss of profitability.<\/li><li>It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector.<\/li><\/ul>\n\n\n\n<p><strong>About Co-operative Banks:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A Co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank.<\/li><li>Co-operative banking in India started in the early 20th century with the passing of Co-operative Societies Act in 1904 and later with the Co-operative Societies Act, 1912.<\/li><li>They are often created by persons belonging to the same local or professional community of sharing a common interest.<\/li><li>They are classified into two categories namely Urban Co-operative Banks(UCBs) and rural co-operative banks.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News:The Reserve Bank of India has revised its supervisory framework for urban co-operative banks(UCBs) to expedite resolution of UCBs experiencing financial stress. Facts: About the revised framework: The framework imposes restrictions on urban cooperative banks(UCBs) for deterioration of financial position in line with the prompt corrective action(PCA) framework that is imposed on commercial banks. The&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/stressed-urban-cooperative-banks-to-face-pca-like-curbs\/\">Continue reading <span class=\"screen-reader-text\">Stressed urban cooperative banks to face PCA-like curbs<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3127],"tags":[394,3992],"class_list":["post-86417","post","type-post","status-publish","format-standard","hentry","category-economy","tag-rbi","tag-urban-cooperative-banks","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704230555},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=86417"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86417\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=86417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=86417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=86417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}