Economics • Banking & FinanceMedium
Under the Prompt Corrective Action (PCA) framework of the Reserve Bank of India, which of the following parameters are typically monitored to trigger restrictions?
A. Capital to Risk-weighted Assets Ratio (CRAR), Net Non-Performing Assets (NPAs), and Return on Assets (RoA).✓ Correct Answer
B. Foreign exchange reserves, current account deficit, and fiscal deficit.
C. Consumer price inflation, wholesale price index, and industrial growth rate.
D. Total agricultural credit disbursement and rural branch expansion.
💡 Solution & Explanation
The Prompt Corrective Action framework monitors capital adequacy through CRAR, asset quality through net non-performing assets, and profitability through return on assets to check financial stress in banks. It acts as an early intervention mechanism for weak financial institutions.
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