RBI to Transition Weak Urban Co-operative Banks from SAF to PCA Framework
| Aspect | Details |
|---|---|
| Event | RBI transitions 500 financially weak UCBs from SAF to PCA framework from April 1, 2025. |
| Purpose | Strengthen regulatory oversight and ensure timely remedial action. |
| Transition Details | SAF (introduced in 2012) replaced by PCA framework for UCBs. |
| Objective of PCA | Early supervisory intervention to improve financial health of UCBs. |
| Key Monitoring Indicators | Capital Adequacy, Asset Quality (NPAs), Profitability. |
| Capital Requirements | UCBs must raise additional capital if net NPA exceeds 6% of net advances. |
| Dividend Restrictions | Restrictions on dividend payouts may discourage fresh capital investments. |
| RBI's Additional Actions | PCA framework does not limit RBI from imposing further corrective measures. |
| Industry Concerns | PCA framework for UCBs seen as unfair; earlier intervention suggested. |