RBI Prompt Corrective Action

On Apr. 13, RBI proposed revised prompt corrective action framework.

  • Covers capital, asset quality and profitability metrics for bank monitoring framework.
  • Breach of any risk threshold result in invocation of the prompt correction action rules.
  • Risk thresholds include CRAR or CET1 ratio triggers, NNPA ratio, ROA and leverage.
  • They are split over three increasing levels with breach of level 3 indicating resolution.
  • Risk Thresholds
  • Risk threshold 1 requires restriction in dividends, threshold 2 restriction on expansion.
  • And threshold 3 requiring restriction on management compensation and director fees.
  • Effectiveness
  • Rules take effect Apr. 1, 2017.

Regulators RBI
Entity Types Bank
Reference rbi/2016-17/276, dbs.co.ppd. bc.no.8/11.01.005/2016-17, PR, 4/13/2017
Functions Compliance; C-Suite; Financial; Legal; Operations; HR
Countries India
Products Banking; Securities
Regions AP
Rule Type Final
Rule Date 4/13/2017
Effective Date 4/1/2017
Rule Id 31896
Linked to N/A
Report Issue 4/15/2017
Report Section International

Last substantive update on 04/18/2017