2.6.4. Recent Initiatives

2.6.4.1. Prompt Corrective Action Framework

♤ Prompt Corrective Action allows the RBI to pose certain restrictions on a bank when certain limits are breached.

♤ These restrictions may include halting branch expansion, stopping dividend payments, special audit and more.

♤ The risk thresholds that are taken into account are asset quality, profitability, NPA limit and the like.

♤ PCA was first issued by the RBI in May 2014 and has recently been revised in April 2017.

2.6.4.2. Indradhanush Plan

♤ It is an umbrella scheme for banking reforms which includes seven elements

♤ Appointment: Separating post of Chairman and Managing Director to bring more professionalism.

♤ Bank Board Bureau: a body of eminent professionals and officials, with various important functions like recommending for selection of heads, helping banks in developing strategies and plans, advising banks on strategies of consolidation, etc.

♤ Capitalization: by infusion of equity capital

♤ De-stressing: Strengthening Asset Reconstruction Companies and Establishment of six New debt recovery tribunals (DRCs) and creation of a Central Repository of Information on Large Credits (CRILC) by RBI to collect, store and disseminate credit data to banks.

♤ Empowerment: Non-interference in the functioning of public sector banks and encouraging them to take decisions independently; keeping the commercial interest of the organization in mind.

♤ Framework for accountability: through key performance indicators for state-run PSBs

♤ Governance reforms: “Gyan Sangam” a conclave of PSBs and Financial institutions attended by all major stake-holders.