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      Question

      The revised Prompt Corrective Action (PCA) framework is

      primarily a tool designed by the regulator to manage financial stability. What type of mechanism does it provide?
      A Quantitative credit allocation tool Correct Answer Incorrect Answer
      B Qualitative early intervention and structured monitoring mechanism Correct Answer Incorrect Answer
      C Fiscal regularisation program Correct Answer Incorrect Answer
      D Statutory liquidity enhancement facility Correct Answer Incorrect Answer
      E Open market operations framework Correct Answer Incorrect Answer

      Solution

      The PCA framework is a structured early-intervention tool that enables the regulator to assess, monitor, control, and implement corrective measures on financially troubled or weak banks before they fail.

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