MUMBAI: The Reserve Bank on Tuesday said the strict supervisory norms under the Prompt Corrective Action (PCA) Framework will apply to government-owned non-banking financial companies from October 2024.
Being put under the PCA framework means restrictions on dividend distribution/ remittance of profits; promoters/ shareholders to infuse equity and reduction in leverage; and restrictions on the issue of guarantees or taking on other contingent liabilities on behalf of group companies.
The Reserve Bank introduced the PCA Framework for NBFCs on December 14, 2021.
“The Framework has since been reviewed and it has been decided to extend the same to Government NBFCs (except those in Base Layer) with effect from October 1, 2024, based on the audited financials of the NBFC as on March 31, 2024, or thereafter,” the central bank said in a circular.
Some of the major government non-banking financial companies (NBFCs) include PFC, REC, IRFC and IFCI.
The objective of the PCA framework is to enable supervisory intervention at the appropriate time and requires the supervised entities to initiate and implement remedial measures in a timely manner so as to restore their financial health.
