RBI issues prompt corrective action framework for NBFCs

The PCA framework for NBFCs shall come into effect from October 1, 2022, based on the financial position of NBFCs on or after March 31, 2022

The Reserve Bank of India on Tuesday issued the Prompt Corrective Action (PCA) framework for non-banking financial companies (NBFCs). This means NBFCs will have to strictly meet benchmarks on capital requirement, non-performing assets (NPAs), and asset quality.

It may be recalled that the revised PCA framework for Scheduled Commercial Banks (SCBs) was issued on November 2, 2021. NBFCs have been growing in size and have substantial inter-connectedness with other segments of the financial system. Accordingly, a PCA framework for NBFCs has also been put in place to further strengthen the supervisory tools applicable to NBFCs. This shall apply to:

a) All