Under the Prompt Corrective Action (PCA) framework of the Reserve Bank of India, which of the following is a mandatory restriction imposed when a bank breaches the highest risk threshold?

💡 Solution & Explanation

Under the Reserve Bank of India Prompt Corrective Action framework, breaching higher risk thresholds triggers mandatory restrictions on capital expenditure, branch expansion, and dividend distribution to preserve capital. Total bans on retail deposits or immediate bank liquidations are extreme regulatory actions that fall outside the standard PCA corrective toolkit. The framework aims to instill financial discipline in weak commercial banks early.