3 min read.Updated: 25 Oct 2018, 03:04 AM ISTLivemint
Any dilution in the PCA framework or other measures that have been taken to clean up the banking system will only increase the cost in the long run
It has been reported that, as expected, the government representatives raised the issue of prompt corrective action (PCA) framework at the Reserve Bank of India (RBI) board meeting on Tuesday. The motivation, of course, is that a dilution will enhance the lending capacity of banks. An improvement in the lending capacity will help fund investments, which are expected to pick up from here on. It could also be useful in the present situation when non-banking financial companies are facing liquidity issues and are not in a position to extend loans in a significant way. The banking regulator has put 11 banks, including Central Bank of India, Allahabad Bank, Indian Overseas Bank, Corporation Bank and Bank of India, under the PCA framework.
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