Page 52 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) 23062 COPY.indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
th
nd

Indicator Risk Threshold-1 Risk Threshold-2 Risk Threshold-3

Leverage Ratio 2.5 times but <3 times  3 times but <3.5 times 3.5 times
NNPA Ratio
>6% but  9% >9% but 12% >12%
(including NPIs)
Exit from PCA and Withdrawal of Restrictions quarterly financial statements, one of which
under PCA - Once a NBFC is placed under should be Annual Audited Financial Statement
PCA, taking the NBFC out of PCA Framework (subject to assessment by RBI); and b) based on
and/or withdrawal of restrictions imposed Supervisory comfort of the RBI, including an
under the PCA Framework will be considered: assessment on sustainability of profitability of
a) if no breaches in risk thresholds in any of the the NBFC.
parameters are observed as per four continuous The menu of corrective actions is as below:

Mandatory and Discretionary actions

Specifications Mandatory actions Discretionary actions

Restriction on dividend distribution/remittance of profi ts;
Common menu
Promoters/shareholders to infuse equity and reduction in
Risk leverage; Special Supervisory
Actions
Threshold 1 Restriction on issue of guarantees or taking on other
Strategy related
contingent liabilities on behalf of group companies (only for
CICs) Governance related
Capital related
Risk In addition to mandatory actions of Threshold 1, Credit risk related
Threshold 2 Restriction on branch expansion
Market risk related
HR related
In addition to mandatory actions of Threshold 1 & 2, Profitability related

Risk Appropriate restrictions on capital expenditure, other than for Operations/Business
Threshold 3 technological upgradation within Board approved limits related
Restrictions/reduction in variable operating costs Any other.

Common Menu for Selection of Discretionary and escrowing of cash inflows to meet
Corrective Actions deposit liabilities to protect the interest
of the depositors, investment activities

Market risk related Actions -
 Restrictions on/reduction in borrowings HR related Actions -
from the debt market, extent of ALM  Restriction on staff expansion/staff
mismatch, accepting/ renewing deposits compensation & Review of specialized

The Institute Of Cost Accountants Of India

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