Question

    PCA norms allow the regulator to place certain

    restrictions such as halting branch expansion and stopping dividend payment. ……………………………………………………………. Other corrective action that can be imposed on banks include special audit, restructuring operations and activation of recovery plan. Banks’ promoters can be asked to bring in new management, too. The RBI can also supersede the bank’s Board, under PCA. In each of these questions, a paragraph is given that has blank in it. Five sentences (1), (2), (3), (4) and (5) are suggested. Out of these, only one fits the blank in the context of the paragraph. Pick that sentence as the answer.
    A Some more lenders are expected to come under the corrective action framework as and when their asset quality worsens. Correct Answer Incorrect Answer
    B It can even cap a bank’s lending limit to one entity or sector. Correct Answer Incorrect Answer
    C These banks are comfortable on the capital parameter. Correct Answer Incorrect Answer
    D There are two type of restrictions, mandatory and discretionary. Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    On reading the passage carefully it can be seen that the blank requires an option that can provide more information about the restrictions that PCA norms allow regulators to place. Only option b provides this information. Other options are incorrect and irrelevant, contextually.

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