The Reserve Bank of India on Tuesday announced a Prompt Corrective Action (PCA) framework for non-banking financial companies (NBFCs) to strengthen the supervisory instruments implemented.
This is in line with the PCA framework for banks, aimed at helping them improve their financial position and governance issues.
The framework will be applicable to all deposit taking NBFCs, middle, upper and top non-deposit taking NBFCs, including investment and credit firms, core investment firms, infrastructure debt funds, infrastructure finance firms and microfinance institutions. It does not allow state-owned NBFCs to accept or not to accept public funds, primary dealers and housing finance firms. This will be effective from October 1, 2022, RBI said in a circular.
RBI said the objective of the framework is to enable appropriate timely supervisory intervention and the supervised entity is required to initiate and implement remedial measures in a timely manner, so as to restore its financial health.
Among large NBFCs (with assets of over ₹25,000 crore), rating agency ICRA noted that three entities were violating the net NPA norms till September. However, all entities have established paternity. ,with PTI input,
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