About 500 UCBs to shift to RBI's new remedial regime from today
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Apr 1, 2025 | Page No.: 7 | Position: Top Center | Source: K Ram Kumar | Sq Cm: 288 | AVE: 28793 | PR Value: 143965
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About 500 UCBs to shift to RBI s new remedial regime from today CORRECTIVE ACTION The PCA framework aims at enabling supervisory intervention at an appropriate time rective action by their man- UCBs should be taken at the K Ram Kumar agement first and supervis- incipient stage We don t Mumbai ory action by the Reserve want the RBI to close down Bank in case the financial po- the banks About 500 weak urban co-op- sition of the bank does not erative banks UCBs which improve ASSET QUALITY are currently under the Re- Capital and asset quality Giving an example of asset serve Bank of India s RBI are the key common areas quality which is one of the supervisory action frame- for monitoring when a key factors for supervisory work SAF will transition scheduled commercial bank monitoring Krishna under- to the prompt corrective ac- SCB or an UCB is put un- scored that if the net NPA tion PCA framework for der PCA non-performing asset of an remedial action with effect But the third area of mon- UCB under PCA is just above from April 1 2025 itoring differs it is lever- 6 per cent of its net advances The Central bank s PCA age for an SCB and profitab- RBI requires them to raise framework will replace the BIG MOVE The PCA framework does not preclude the RBI ility for a UCB capital and restricts declara- SAF for financially unsound from taking any other action as it deems fit at any time D Krishna former Chief tion payment of dividend and poorly managed UCBs Executive the National Fed- with effect from the afore- quires the UCBs to initiate addition to the corrective ac- eration of UCBs and Credit AREA OF CONCERN mentioned date and implement remedial tions prescribed in the Societies said The PCA UCBs depend on members measures in a timely manner framework framework is very elabor- for raising capital If di- THE OBJECTIVE to restore their financial The SAF for weak UCBs ate The framework that is vidend is not paid members The objective of the PCA health The PCA framework which was introduced in being brought in for UCBs is will be discouraged from in- framework is to enable su- does not preclude the RBI 2012 envisaged in the initial almost similar to that for fusing fresh capital So the pervisory intervention at an from taking any other action stage of deterioration in the commercial banks This is bank could be in a spot he appropriate time and re- as it deems fit at any time in financial position self-cor- not fair Action to revive said