NPA Current Affairs - 2019
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The Reserve Bank of India (RBI) has lifted the Prompt Corrective Action (PCA) framework operational curbs on Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC).
These public sector banks are out of the prompt corrective action (PCA) framework. This will aid in making marked improvements in the capital positions and asset quality.
The PCA restrictions were lifted after these banks provided a written commitment that they would comply with the norms of minimum regulatory capital, net NPAs (Non-performing Assets) and leverage ratio on an ongoing basis. These Banks have also apprised RBI of the structural and systemic improvements they have put in place.
Prompt Corrective Action (PCA) Framework
Prompt Corrective Action (PCA) framework has been issued by the RBI to maintain the sound financial health of banks. The RBI will initiate certain structured and discretionary actions for the bank under the PCA when the Banks breach any of the three key regulatory trigger points:
- Capital to risk-weighted assets ratio
- Net non-performing assets
- Return on assets.
The PCA framework is aimed at nudging the banks to take corrective measures in a timely manner, in order to restore their financial health.
Tags: Bank of India • Bank of Maharashtra • Capital to risk-weighted assets ratio • Non-performing assets • NPA • Oriental Bank of Commerce • PCA • Prompt Corrective Action • RBI • Reserve Bank of India
The Reserve Bank of India (RBI) has voiced concern on the spike in non-performing assets (NPAs) under the government’s flagship scheme Pradhan Mantri Mudra Yojana to support micro-enterprises in the country.
Disbursements under Pradhan Mantri Mudra Yojana
The annual report of the Pradhan Mantri Mudra Yojana provides following data about the disbursements under the Pradhan Mantri Mudra Yojana:
- The total disbursements under the scheme stood at Rs 2.46 trillion in FY 18.
- 40 per cent of these disbursements went to women entrepreneurs and 33 per cent to social categories.
- More than 4.81 crore micro-borrowers have benefited through the scheme.
The RBI has raised the red flag over the Pradhan Mantri Mudra Yojana since the bad loans under the scheme have increased to Rs 11,000 crore.
Pradhan Mantri Mudra Yojana
Pradhan Mantri MUDRA Yojana (PMMY) launched in 2015 aims to provide loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises. The loans are provided through Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs. The Mudra loans are provided under three categories:
- Under Shishu up to Rs 50,000 under.
- Under Kishore for loans between Rs 50,001-Rs 5 lakh.
- Under Tarun for loans between Rs 5,00,001 and Rs 10 lakh category.
The categories signify the stage of growth/development and funding needs of the beneficiary microunit/entrepreneur and also provide a reference point for the next phase of graduation/growth.