In the context of banking in India, Prompt Corrective Action is often seen in the news. Which of the following statements is/are correct with respect to Prompt Corrective Action?
1. If there is more number of banks under the Prompt Corrective Action Framework, it means that the health of banking is good.
2. More number of banks under the Prompt Corrective Action Framework essentially means the credit growth in the economy has slowed down.
Select the correct answer using the code given below:
1 only
2 only
Both 1 and 2
Neither 1 nor 2
• Prompt Corrective Action (PCA) Framework is an early resolution plan of the Reserve Bank of India (RBI), when there are signs of a bank going weak in terms of asset quality, capital adequacy and insufficient profits.
• When a bank is brought into the PCA Framework, the RBI can impose various restrictions on the bank and infuse capital in the identified bank. The basic objective of the PCA Framework is to bring back the bank to normal healthy conditions.
• The PCA Framework is applicable only to commercial banks.
• Furthermore, the number of banks under PCA does not necessarily mean credit growth has weakened, although it could happen.
The term 'West Texas Intermediate', sometimes found in news, refers to a grade of
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