Reserve introduces PCR framework for NBFCs

The Reserve Bank of India (RBI) on Tuesday issued the Prompt Corrective Action (PCA) framework for NonBanking Financial Companies (NBFCs).

The Prompt Corrective Action Framework for NBFCs will take effect on October 1, 2022, based on the financial status of NBFCs on or after March 31, 2022, according to a statement from the Central Bank. "A separate circular on the applicability of the PCA Framework to Government NBFCs would be issued in due course," the RBI noted.

It's worth noting that on November 2, 2021, the revised Prompt Corrective Action (PCA) framework for Scheduled Commercial Banks (SCBs) was released. NBFCs have been expanding in size and are highly interconnected with other financial system segments. As a result, a PCA Framework for NBFCs has been established to bolster the supervisory instruments available to NBFCs, according to the central bank. All deposit-taking NBFCs, barring Government businesses, and all non-deposit-taking NBFCs in the middle, upper, and top levels will be subject to the new framework.

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