Protective Custody
The Reserve Bank of India's corrective action framework for weak banks is akin to taking an injured athlete to bed rest," explained a Reserve Bank of India (RBI) deputy governor last year when bank customers started worrying about close to a dozen public sector banks (PSBs) facing regulatory interventions, the most prominent being the prompt corrective action (PCA) scheme. The PCA framework is triggered when a bank's three critical parameters asset quality, return on assets (RoA) and capital adequacy fall below a threshold. It leads to restrictions on payment of dividend, setting up new branches, fresh hiring, etc., to restore the bank's health. The RBI has put 11 out of 27 PSBs which together account for three fourth of the banking assets under the PCA framework.
But can the RBI's care help
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