Why in news? RBI has put DENA Bank under PCA Framework.
Prompt Corrective Action (PCA) Framework:
RBI has issued a policy action guideline in the form of Prompt Corrective Action (PCA) Framework if a commercial bank’s financial condition worsens below a mark.
The PCA framework specifies the trigger points or the level in which the RBI will intervene with corrective action.
These trigger points are expressed in terms of parameters for the banks.
The parameters that invite corrective action from the central bank are:
Capital to Risk weighted Asset Ratio (CRAR):
CRAR less than 9%, but equal or more than 6%
CRAR less than 6%, but equal or more than 3%
CRAR less than 3%
Net Non-Performing Assets (NPA):
Net NPAs over 10% but less than 15%
Net NPAs 15% and above
Return on Assets (RoA):
ROA below 0.25%
When these parameters reach the set trigger points for a bank (like CRAR of 9%, 6%, 3%), the RBI will initiate certain structured and discretionary actions for the bank.
Some of the structured and discretionary actions that could be taken by the Reserve Bank are:
Restrictions on borrowing from inter-bank market to steps to merge/amalgamate/liquidate the bank or impose moratorium on the bank if its CRAR does not improve beyond etc.).
The corrective actions are tough with worsening of the financials.
The PCA framework is applicable only to commercial banks and not extended to co-operative banks, non-banking financial companies (NBFCs) and FMIs.
PCA on Dena Bank:
Earlier the RBI in April 2017 had issued a new set of enabling provisions under the revised PCA framework with a clause that if the bank does not show improvement then it could be either be merged or taken over by other bank.
Now, in 2018, the Reserve Bank has initiated prompt corrective action against public sector lender Dena Bank NSE -0.81 %.
This has been done in view of high non-performing loans, restricting the bank from giving fresh credit and new hiring.
This means Dena bank can disburse loans for credit facilities already sanctioned, but cannot sanction fresh loans.
In addition, RBI also has barred from recruiting more staff.
RBI may lift these restrictions in case the bank improves profitability and reduces the ratio of bad loans.
FACT # 2
Why in news? Sikkim has got its first airport– Pakyong Airport which is considered as an engineering marvel.
Pakyong Airport is a Greenfield airport near Gangtok, the state capital of Sikkim, India.
The airport, spread over 400 ha (990 acres), is located at Pakyong village about 35km (21.75 mi) south of Gangtok.
It is the first Greenfield airport to be constructed in the Northeastern Region of India.
As on date, Sikkim was the only state in India to not have an airport.
The new Pakyong Airport in Sikkim is an engineering marvel as it is built at a height of 4,500 feet on inhospitable terrain.
This is the first ever airport to be built in the state.
Sikkim is yet to get connected by Indian Railways.
The Pakyong Airport is about 60 kms away from the Indo China border.
It has received aerodrome license from Directorate General of Civil Aviation for commercial operations.
It is now the 100th operational airport in the country and is built as a part of the regional connectivity scheme UDAN (Ude Desh ka Aam Naagrik).
As a part of this scheme, 25 airports have been added in the past few years.
The Indian Air Force has already landed its Dornier 228 aircraft at the new Pakyong airport and will be able to land other types of aircraft as well.
The new airport will also prove to be a boon to tourists to Sikkim.
FACT # 3
Why in news? Indian Navy Ship Sumedha has been deployed in Maldives to carry out surveillance of the exclusive economic zone as a joint mission.
INS Sumedha(P58) is the third Saryu class patrol vessel of the Indian Navy.
It is designed and constructed indigenously by the Goa Shipyard Limited.
It is designed to undertake:
fleet support operations
coastal and offshore patrolling
monitoring of sea lines of communications
offshore assets and escort duties
The vessel will undertake joint EEZ surveillance of Maldives as part of Indian navy’s ‘Mission based deployments’.
The ship would undertake an operational turnaround (OTR) and Male where ship would interact and impart training to Maldives’ National Defence Forces (MNDF) personnel.
INS Sumedha would also embark MNDF personnel onboard and undertake joint EEZ surveillance of Maldives.
The MNDF personnel would disembark at Male, on completion of the EEZ surveillance.