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Question
Q. The term ‘Prompt Corrective Action (PCA)’ sometimes appearing in news, is used in relation to
Q. The term ‘Prompt Corrective Action (PCA)’ sometimes appearing in news, is used in relation to
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Solution
The correct option is D Banking operations
Explanation:
- Prompt Corrective Action (PCA) is a framework in which banks with weak financial records are placed under the supervision of the Reserve Bank of India.
- The PCA framework allows a regulator to place specific restrictions like stopping the payment of dividends or setting up new bank branches. It also gives powers to place a cap on a bank’s lending limit to one sector.
- Other corrective actions are as follows:
- Special audits
- Restructuring operations
- Activation of a recovery plan
- Superseding the bank’s board of directors
- Bringing in new management
Explanation:
- Prompt Corrective Action (PCA) is a framework in which banks with weak financial records are placed under the supervision of the Reserve Bank of India.
- The PCA framework allows a regulator to place specific restrictions like stopping the payment of dividends or setting up new bank branches. It also gives powers to place a cap on a bank’s lending limit to one sector.
- Other corrective actions are as follows:
- Special audits
- Restructuring operations
- Activation of a recovery plan
- Superseding the bank’s board of directors
- Bringing in new management
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