Letters: Welcome move

That assumes banks' risk aversion to lending in relation to borrowers' credit worthiness

With reference to the front-page report, “RBI tightens screws on banks to ease bad debt” by Anup Roy and Abhijit Lele (April 14), the Reserve Bank of India’s (RBI) proposed advanced risk management measures known as Prompt Corrective Action (PCA) in alignment with Basel norms are welcome. 

PCA as a corrective measure could help the RBI trim the banking system if commercial bank fails to comply with revised prudential norms or do not improve their performance. Threshold limits specified in PCA for four financial indicators, namely capital adequacy, asset quality, return on asset and leverage can help the central bank