Money & Banking

`No case for easing any norms including PCA framework’

Our Bureau New Delhi | Updated on September 13, 2019 Published on October 26, 2018

Rajiv Kumar, Secretary, Department of Financial Services   -  Kamal Narang

Centre looking to align them with best in the world, says DFS Secretary Rajiv Kumar

The Centre is not in favour of dilution of Prompt Corrective Action (PCA) norms, but would be keen that these norms are in alignment with the best in the world, a top Finance Ministry official said.

"What is being talked about is to look and align our norms to the best practices in the world. Take it from the best and align to it and don't keep our norms higher than that", Rajiv Kumar, Secretary, Department of Financial Services told reporters on the sidelines of SIDBI National Microfinance Congress 2018.

He asserted that the Government is not looking at any relaxation for PCA or any other norm. "There is no relaxation of any kind or in any norm. Let's be very clear about that. It's only about alignment with the best of the practices in the world. Make it as strong as the best in the world but not higher than that", he said.

As many as 11 of the 20 commercial banks of the country are under the RBI's PCA framework, which restricts these banks from further lending.

Both the Government and RBI had recently discussed aspects around PCA framework and how to strengthen it.

Plea for revisiting PCA guidelines

It may be recalled that some of the public sector bank chiefs had at a review meeting chaired by Finance Minister Arun Jaitley in September made a case for revisiting PCA guidelines as these norms were impacting their lending ability. The RBI has been strongly defending the current PCA framework.

RBI Deputy Governor Viral Acharya had earlier this month conveyed that any relaxation in the PCA norms imposed on weak banks should be avoided.

Capital infusion

Meanwhile, DFS Secretary Kumar told reporters that any such decision will be taken only after the second quarter results."We will first assess the results and then decide", he said.

Kumar also said in his address at the SIDBI event that the Centre would in the next one week announce fresh measures to provide a boost to financial sector."Very soon you will be hearing on this", he told reporters when asked if more liquidity enhancement measures for NBFCs are on the cards.

Published on October 26, 2018
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