RBI introduces tough PCA framework for large NBFCs

The Reserve Bank of India (RBI) on Tuesday introduced a prompt corrective action (PCA) framework for large non-banking financial companies (NBFCs) with effect from October 2022, putting restrictions on para-banks whenever vital financial metrics dip below the prescribed threshold.

It will put restrictions on para-banks whenever vital financial metrics dip below a prescribed threshold. The move will bring NBFCs almost on a par with banks in terms of supervision and regulatory reach. This follows scale-based regulations and revision in non-performing asset norms brought in by the regulator for the sector.