Under the Prompt Corrective Action (PCA) framework of the Reserve Bank of India, which of the following is typically used as a core risk threshold indicator?

💡 Solution & Explanation

The Capital to Risk-Weighted Assets Ratio serves as a primary threshold indicator under the Reserve Bank of India Prompt Corrective Action framework to evaluate commercial bank solvency. Indicators like the Wholesale Price Index measure macroeconomic inflation rather than individual bank capital health. The Prompt Corrective Action framework was introduced to instigate timely supervisory interventions for weak financial institutions.