Under the Prompt Corrective Action (PCA) framework of the Reserve Bank of India, which of the following is a key risk threshold trigger?

💡 Solution & Explanation

The Reserve Bank of India utilizes the Capital to Risk-weighted Assets Ratio along with Net Non-Performing Assets and leverage ratios as primary trigger thresholds under the Prompt Corrective Action framework. When a commercial bank breaches these critical parameters, regulatory restrictions are imposed to restore financial health. Such macro-prudential tools help safeguard the banking sector from systemic risks and insolvency. The framework is reviewed periodically to align with evolving global Basel norms.