Govt asks RBI to water down PCA scheme, feels norms have put burden on PSBs

Department of Financial Services Secretary Rajiv Kumar expressed confidence that PSBs will come out of the PCA this fiscal year

The government has asked the Reserve Bank of India (RBI) to consider diluting the Prompt Corrective Action (PCA) framework, to ensure that regulatory sanctions against public sector banks (PSBs) are lifted swiftly. The framework is aimed at maintaining sound financial health of banks.

The government feels the RBI’s decision last year to tighten PCA norms put additional burden on PSBs, which had already been reeling from the increased provisioning for bad loans on their books due to the regulator’s asset quality review in 2015-16, a senior government official said.

The Centre has asked the RBI to review all three aspects of the