The Reserve Bank of India has issued the Prompt Corrective Action (PCA) framework for non-banking financial companies (NBFCs). It will come into effect from October 1, 2022, based on the financial position of NBFCs on or after March 31, 2022. A separate circular will be issued in due course with regard to the applicability of the PCA framework to government NBFCs, said RBI in a statement.
It may be recalled that the revised PCA framework for scheduled commercial banks (SCBs) was issued on November 2, 2021. NBFCs have been growing in size and have substantial inter-connectedness with other segments of the financial system. Accordingly, a PCA framework for NBFCs has also been put in place to further strengthen the supervisory tools applicable to NBFCs. This shall apply to:
a) All deposit-taking NBFCs (excluding government companies),
b) All non-deposit-taking NBFCs in the middle, upper, and top layers excluding NBFCs not accepting/not intending to accept public funds, government companies, primary dealers, and housing finance companies.
