Prompt Corrective Action (PCA) is a framework designed to keep a check on the weak bank’s asset quality and thus restricting them from lending until their financial parameters are improved. Some of the parameters are capital adequacy, the ratio of bad loans to total loans, etc.

Last year 11 banks were placed under the purview of PCA, among 11 banks 6 banks still are under PCA while, others like Bank of India, Bank of Maharashtra, Oriental Bank of Commerce, Allahabad Bank, Corporation Bank, and Dhanalaxmi Bank improved their financial health of asset and came out of PCA. The 6 banks that are under PCA are Central Bank of India, Dena Bank, IDBI Bank, Indian Overseas Bank, UCO Bank and United Bank of India.

Recently, Allahabad Bank and Corporation Bank had received Rs 6,896 crore and Rs 9,086 crore respectively which has ensured that these banks meet their capital funds requirement as per parameters. As these three banks have met the capital adequacy and non-performing asset (NPA) criteria as set by RBI, they are now out of the PCA watch-list. PCA monitors bank’s lending pattern and thereby preventing an asset to become NPA.