21/12/2021 - Economy

KEY POINTS

·        In a strategic move, the RBI has extended the framework of Prompt Corrective Action (PCA) to non-banking financial companies (NBFCs), bringing their regulations closer to banks

·        The RBI has been simultaneously working on harnessing the potential of NBFCs by allowing them more operational freedom to step up growth, but at the same time calibrating their regulatory rigour.

·        The need to appoint a chief risk officer (CRO) was also mandated to better regulate the institutionalised processes of risk governance.

·        The format and parameters of PCA for NBFCs is close to the one prescribed for banks though the target parameters could be different.

·        If they enter higher risk thresholds, they may face more stringent restrictions like embargo on opening branches and altering the structure of the board composition to make regulations work their way to improve.

·        These conditions could be limiting the autonomy of the NBFCs but, at the same time, they could work as a systemic control to make them work upon specific strategies to come out of PCA as quickly as possible.

·        The transparency of the PCA framework should be a potent tool for the boards of NBFCs to proactively keep tab on the key parameters.

Hi IASParliament,
There is bug coming in your Portal.
When I am selecting image to upload here, It is uploading old image automatically.
for example - 
I am uploading sheet of PCA Framwork. But second sheet is uploading on Anganwadis Topic.

Ask your IT Partner to resolve this.

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