PCA banks remain on edge even as solvency position improves slightly

The composite solvency ratio for these lenders remains above 100, indicating that their net worth would be wiped out completely if they had to provide for bad loans

Even as the central government continues to make the case for relaxing the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework, the solvency position of some of the banks placed under this framework does seem to have improved slightly, suggests an analysis by Business Standard. 

At the aggregate level, the solvency ratio (ratio of a lender's net NPAs to its net worth) of all public sector banks has improved from 74 per cent at the end of the fourth quarter of 2017-18 to 67 per cent at the end of the first half of 2018-19. This essentially means