RBI extends PCA framework for NBFCs to government NBFCs from October 1, 2024

Reserve Bank of India

The Reserve Bank of India (RBI) on October 10 said it has extended the prompt corrective action (PCA) framework for NBFCs to government NBFCs with effect from October 1, 2024.

"The Framework has since been reviewed and it has been decided to extend the same to Government NBFCs (except those in Base Layer) with effect from October 1, 2024," RBI said in a release.

The central bank introduced the  PCA Framework for NBFCs on December 14, 2021.

The Reserve Bank mentioned three risk threshold for applying PCA to NBFCs.

Prior to this, the RBI had introduced a Prompt Corrective Action Framework (PCA) for Scheduled Commercial Banks in 2002 and the same has been reviewed from time to time based on the experience gained and developments in the banking system.

The objective of the PCA Framework is to enable Supervisory intervention at appropriate time and require the Supervised Entity to initiate and implement remedial measures in a timely manner, so as to restore its financial health. The PCA Framework is also intended to act as a tool for effective market discipline, the RBI said in a release.