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      Question

      Regarding 'Prompt Corrective Action' (PCA)

      framework: 1. PCA applies to both Public and Private sector banks. 2. It is triggered if the Net NPA of a bank exceeds a certain threshold. 3. RBI can restrict dividend payments of a bank under PCA. Which of the statements above is/are correct? 
      A 1 and 2 only Correct Answer Incorrect Answer
      B 2 and 3 only Correct Answer Incorrect Answer
      C 1 and 3 only Correct Answer Incorrect Answer
      D 1, 2, and 3 Correct Answer Incorrect Answer
      E 1 only Correct Answer Incorrect Answer

      Solution

      All statements are correct. PCA is a "watch list" for banks with weak financial health, focusing on Capital, Asset Quality, and Leverage.

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