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    Question

    Read the following passage and answer the next 5 question┬а Central Bank along with a clutch of other lenders was placed under RBI's prompt corrective action (PCA) in 2017 after the regulator found some state-run lenders were in breach of its rules on regulatory capital, bad loans and leverage ratios. Since then all the lenders except Central Bank have improved their financial health and come off RBI's PCA list. A bank under PCA faces greater scrutiny by the regulator and may face lending and deposit restrictions, branch expansion and hiring freezes and other limitations on borrowings. The RBI introduced these norms at a time when Indian lenders were battling record levels of soured assets, prompting the RBI to tighten thresholds. Source: economictimes

    Which of the following is/are considered in the Risk

    Threshold 3, mandatory actions of the Prompt Corrective Action A.┬а┬а┬а Restriction on dividend distribution B.┬а┬а┬а Restriction on branch expansion C.┬а┬а Higher provisions as part of the coverage regime D.┬а┬а Restriction on management compensation
    A A, B and C only Correct Answer Incorrect Answer
    B B and C only Correct Answer Incorrect Answer
    C A and D only Correct Answer Incorrect Answer
    D A and B only Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    When a bank is placed under PCA, one or more of the following corrective actions may be prescribed:

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