Prompt Corrective Action on Banks in India

The Reserve Bank of India (RBI) has stipulated the Prompt Corrective Action (PCA) Framework in order to ensure the adequacy of banks' internal control system and improve their quality. The PCA framework for Indian bank complies with the Core Banking Principles laid down by the Bank for International Settlements BIS). The present study seeks to assess the adherence of the Scheduled Commercial Banks to the Prompt Corrective Action (PCA) expectations. It analyses the performance of Scheduled Commercial Banks in India with regard to the three parameters of PCA, viz. i) Capital to Risk Assets Ratio (CRAR) ii) Non-performing Assets (NPA) and iii) Return on Assets (RoA). It was found that the PCA has made the banks to improve their quality of assets and reduce Non-performing Assets (NPA)