The Reserve Financial institution of India introduced a revised Immediate Corrective Motion framework for banks on Tuesday, the provisions of which might be efficient from Jan. 1, 2022.
The revised framework excludes return on belongings as a parameter which can set off motion underneath the framework. Funds banks and small finance banks have additionally been faraway from the record of lenders the place immediate corrective motion might be initiated, it mentioned in an announcement.
Capital adequacy, asset high quality and leverage would be the key areas for monitoring of banks underneath the revised framework. Within the framework’s earlier iteration introduced in April 2017, the RBI had additionally included profitability as a parameter, monitoring the return on belongings for a financial institution.
The RBI has retained the thresholds for the three parameters from the earlier framework. Breach of any danger threshold could end in invocation of PCA, the assertion mentioned.