RBI's PCA framework to discipline NBFC sector in long run, say analysts

Three different risk thresholds, three different yardsticks to measure PCA risk thresholds. The curns against the NBFC get progressively tightened as they breach higher threshold levels

The Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA) framework for the non-banking finance companies (NBFCs) may not have an immediate impact on the sector but will surely act as a deterrent and discipline the sector, going forward, analysts and experts reckoned.

The PCA framework excludes government firms, non-deposit taking NBFCs with asset size of less than Rs 1,000 crore, as well as private sector housing finance companies.

As per RBI’s framework, there will be three different risk thresholds, and three different yardsticks to measure the PCA risk thresholds. The restrictions against the NBFC get progressively tightened as they