RBI revises PCA regime for urban co-operative banks facing financial stress

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The Reserve Bank of India has rationalised its Supervisory Action Framework (SAF) to initiate prompt corrective action (PCA) for urban co-operative banks (UCBs) facing financial stress. 

UCBs may be placed under PCA if net non-performing assets (NPAs) exceed 6 per cent of net advances, incurs losses for two consecutive financial years or has accumulated losses and capital adequacy falls below 9 per cent.

To halt failing asset quality, the RBI may prescribe steps like reduction in exposure limits for fresh loans and advances, restriction on fresh loans and advances carrying risk-weights more than 100 per cent. There would also be curtailment of