Mumbai, Jul 26 (PTI) The RBI on Friday issued a prompt corrective action framework for urban cooperative banks with an aim to enabling supervisory intervention at an appropriate time.

The provisions of the Prompt Corrective Action (PCA) Framework for Primary (Urban) Co-operative Banks (UCBs) will be effective from April 1, 2025.

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The objective of the PCA Framework is to enable supervisory intervention at an appropriate time and require the UCBs to initiate and implement remedial measures in a timely manner, to restore their financial health.

The Reserve Bank had issued a Supervisory Action Framework (SAF) as an early intervention tool for bringing about desired improvements in weak UCBs and UCBs which are experiencing financial stress. The SAF was last revised in January 2020.

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"This PCA framework shall replace the SAF," the RBI said in a statement.

The revised framework seeks to provide flexibility to design entity specific supervisory action plans based on the assessment of risks on a case-by-case basis.

"The framework has been suitably harmonised with similar frameworks applicable for Scheduled Commercial Banks and Non-Banking Financial Companies, with suitable modifications keeping in mind the underlying principle of proportionality," it said.

RBI said the PCA framework is largely principle-based with fewer number of parameters as compared to the SAF, without any dilution in the supervisory rigour.

"The revised framework is expected to give more focus on the larger UCBs requiring more intensive monitoring by optimal utilisation of supervisory resources," it added.

Capital, asset quality and profitability will be the key areas for monitoring in the revised PCA Framework.

The framework will be applicable to all UCBs except the small ones (Tier 1 UCBs).

Reserve Bank has categorization UCBs in four tiers for regulatory purposes.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)