The Reserve Bank of India (RBI) prescribed a Prompt Corrective Action (PCA) framework for relatively weak urban co-operative banks (UCBs), with deposits above '100 crore (upper tier category), to nurse them back to health. As per the framework, a financially unsound and ill-managed UCB can be brought under PCA if it breaches the risk thresholds of identified indicators pertaining to capital and profitability (net profit).
The provisions of the PCA Framework will be effective from April 1, 2025. Currently, there are around 1,500 UCBs in the country. RBI classifies UCBs as Tier-I (deposits up to '100 crore); Tier-2 (more than '100 crore and up to '1,000 crore); Tier-3 (deposits more than '1,000 crore and up to '10,000 crore); and Tier-4 (above '10,000 crore). Tiers 2 to 4 come under the upper Tier.
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