PCA Framework For NBFCs

Please Subscribe and Get Daily Updates in Your Inbox!!!

Please Subscribe and Get Daily Update in Your Inbox
Loading

16 December 2021 Current Affairs:RBI brought in the PCA, prompt corrective action, a framework for non-banking finance companies (NBFCs).

Highlights:

  • NBFCs will face limitations under the PCA framework when parameters like capital adequacy ratio, non-performing assets, and Tier 1 capital fall below the specified levels.
  • Banks are already protected under the framework.
  • The PCA framework for NBFCs will be executed from October 1, 2022, on the idea of the financial circumstances of NBFCs on or after March 31, 2022.
  • PCA framework will be eligible for all deposit-taking NBFC.
  • It’ll exclude government NBFCs, housing finance companies, primary dealers, and other non-deposit-taking NBFCs within the upper, middle, and top layers.
  • RBI also will restrict the issuance of guarantees or taking other contingent liabilities for group companies.
  • When the NBFC hits the danger threshold 2, it’ll be prohibited from opening branches. 
  • On hitting the danger threshold 3, the cost of NBFC will be stopped.
  • PCA will be set when the net non-performing assets are:
  • 6-9 percent (risk threshold 1)
  • 9-12 percent (risk threshold 2)
  • More than 12 percent (risk threshold 3)

Leave a Reply

Your email address will not be published.