Amid differences between the Reserve Bank of India (RBI) and the finance ministry, officials said the government was upset with the central bank for not consulting it before finalising norms for prompt corrective action (PCA) and classification of non-performing assets (NPAs). The RBI did not discuss these at its board meetings either, a senior government official said.
“The PCA framework was revised and tightened in April 2017, but there was no discussion in any board meeting. The government does not know the rationale behind revising the framework and how the RBI arrived at it. Similarly, there was no discussion in the board meeting on the revised NPA framework,” said an official.
One of the main areas of contention between the RBI and the government is the revised PCA framework, notified by the regulator in April last year.
The government wants the RBI to align the PCA norms with the globally-accepted Basel regulations. However, the RBI feels imposing the PCA helped in “stabilising the banks at risk”; any relaxation could be avoided at this stage.
via Govt upset with RBI for being kept in the dark about PCA, NPA norms | Business Standard News
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