Under the Prompt Corrective Action (PCA) framework of the RBI, which of the following is a mandatory restriction imposed on a distressed bank?

💡 Solution & Explanation

Under the Prompt Corrective Action framework administered by the Reserve Bank of India, restrictions on dividend distribution and profit remittances are mandatory corrective steps imposed to conserve internal capital. Measures like asset liquidation or compulsory mergers are severe actions that are not universally mandatory at the onset of PCA categorization. The framework aims to restore financial health before a bank reaches terminal insolvency.