RBI Issues Prompt Corrective Action Framework For UCBs

The Reserve Bank of India (RBI) has issued a prompt corrective action (PCA) framework for primary (urban) co-operative banks to give more focus on larger UCBs that require more intensive monitoring by optimal utilisation of supervisory resources. The PCA framework will replace the supervisory action framework (SAF) established as an early intervention tool to improve weak UCBs.

RBI said the PCA framework had been suitably harmonised with similar frameworks applicable to scheduled commercial banks and non-banking financial companies, with suitable modifications considering the underlying principle of proportionality. In a statement, RBI stated that the



revised framework seeks to provide flexibility to design entity-specific supervisory action plans based on the assessment of risks on a case-by-case basis. RBI said that the hard-coded limit of ₹25,000 for restrictions on capital expenditure by UCBs under SAF has been dispensed with.

The PCA framework has been made applicable to all UCBs in Tier 2, Tier 3 and Tier 4 categories, except UCBs under All Inclusive Directions (AID). Tier 1 UCBs have been excluded from the PCA framework for the present. However, they will continue to be subjected to enhanced monitoring under the extant supervisory framework.