RBI versus govt: FinMin was in agreement over changes in PCA in 2017

As the Finance Ministry and the Reserve Bank of India (RBI) try to mend fences, sources told that the central bank wrote a detailed letter and made a presentation to the government before tightening the Prompt Corrective Action (PCA) framework in April 2017. The Finance Ministry had also indicated at the time that it was ‘broadly in agreement’ with the framework that RBI proposed. In its recent rift with RBI, the government had demanded a relaxation in PCA norms for banks, so they can lend more. The Centre has pumped in more than Rs 2.3 lakh crore in public sector banks since 2005, over 50 percent of which has gone into the banks that are currently under PCA.

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