What does PCA mean in banking?
Table of Contents
What does PCA mean in banking?
prompt corrective action
The Reserve Bank has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary …
What is PCA transaction?
What is the full form of PCA in a bank statement? The PCA code on a ATM transaction receipt means “personal access code.” This is the pin number you use to access your account.
What is PCA as per RBI?
The prompt corrective action framework (PCA) introduced by the Reserve Bank of India for non-banking finance companies will align their regulations with those of scheduled commercial banks. The framework is also intended to act as a tool for effective market discipline, said the RBI.
What happens in PCA?
Principal Component Analysis, or PCA, is a dimensionality-reduction method that is often used to reduce the dimensionality of large data sets, by transforming a large set of variables into a smaller one that still contains most of the information in the large set.
What happens if bank is under PCA?
When a bank is placed under PCA, one or more corrective actions may be prescribed based on the risk threshold. The Central bank has defined three risk thresholds for banks based on different parameters. Under the risk threshold 1, the RBI will impose mandatory restrictions on dividend distribution of profits.
What is the criteria of PCA?
Prompt Corrective Action (PCA) Framework for Scheduled Commercial Banks
| PCA matrix – Parameters, indicators and risk thresholds | ||
|---|---|---|
| Parameter | Indicator | Risk Threshold 2 |
| Leverage | Regulatory minimum Tier 1 Leverage Ratio | More than 50 bps but not exceeding 100 bps below the regulatory minimum |
Why banks are under PCA?
The objective of the PCA Framework is to enable Supervisory intervention at appropriate time and require the Supervised Entity to initiate and implement remedial measures in a timely manner, so as to restore its financial health.
How do I get a PCA?
Mathematics Behind PCA
- Take the whole dataset consisting of d+1 dimensions and ignore the labels such that our new dataset becomes d dimensional.
- Compute the mean for every dimension of the whole dataset.
- Compute the covariance matrix of the whole dataset.
- Compute eigenvectors and the corresponding eigenvalues.