WHAT IS RBI'S CORRECTIVE MEASURE AND ITS EFFECTS ON IBPS RECRUITMENT 2017-18(see the change in vacancies of ibps 2017-18)

WHAT IS PROMPT CORRECTIVE ACTION?

To ensure banks don't go bust, RBI has put some norms and rules to access, monitor , control bank policies and take corrective actions whenever it is required.The process under which the actions are taken is known as prompt corrective action(PCA).

WHY PCA IS NEEDED?

PCA should be taken well in time to protect the banks from failure and when the banks have adequate capital to minimize the losses.Bank mergers are more common in this stage rather than closure.

PCA GUIDELINES FOR BANKS:

RBI has proposed a three-tier PCA guidelines for banks that lenders have to comply with.RBI said that if a bank comes under threshold -3 category,then it will bw liable for merger,winding up and reconstruction.The riskiness of banks are divided into 3 categories and is categorized as threshold 1,2 and 3.The categorisation depends on capital adequacy ratio,common equity tier 1 ratio,cnet non performing assets (NNPA),return on assets and tier 1 leverage ratio.

If capital adequacy ration is between 7.75-10.25 percent then it comes under threshold 1 category and CRAR of bank which is between 6.25-7.75 then it comes under thershold 2 category.If CRAR is less than 3.25 percent then the banks come under threshold 3 category.At present,minimum CRAR required is 10.25 percent,below which RBI apples PCA on banks.

Similarly if NPAs are less than 9 percent but greater than 6 percent then the bank will be threshold 1 category.NNPAS between 9-12 percent fall under thershold 2 and 12 percent and above is threshold 3.

What is CRAR?

what is ROI?

EFFECTS OF PCA:

• Restriction on recruitments by the banks under PCA, which makes banks unable to increase their staff members
• Banks which are under PCA can't expand its branch.
• Corrective action by RBI will strengthen the balance sheet and overall financial condition of the bank. Therefore, RBI’s action will ultimately helps banks and their employees. Recruitment will primarily depend on -

1. Expansion plans of banks- Banking Industry is growing fast and India is still highly under-banked. Banks whose financial position is stronger they will do more recruitment for meeting their expansion plans.
2. Retirement of staff members -there will be huge retirement due till 2025.In the early 1990s there were less recruitments occured during that time because of the implementation of computerisation in that era.To increase the efficieny of the banks ,there were less recruitments took place.The people who were aware of this technology were recruited at that time.

BANKS WHICH ARE CURRENTLY UNDER PCA NORMS:

• INDIAN OVERSEAS BANK
• DENA BANK
• IDBI BANK
• UCO BANK
• BANK OF MAHARASHTRA
• CENTRAL BANK OF INDIA

EFFECTS OF PCA ON IBPS 2017-18

This may effect recruitments of some bank which are under PCA.There are 6 banks which are under PCA and we can expect more banks to come under PCA.These banks will not participate in ibps .This is not a matter of worry,it's just a corrective action for the banks which are not performing well.It is a temporary effect of PCA.There are huge retirements are lined up in coming years.

Don't panic and don't fall prey to false rumours,just get on with your preparation extensively.

there are 6 banks which are under PCA which I have mentioned above in bold letters.These banks will not participate in the banking exams of 2017.The above chart shows the tentative vacancies which are going to be released by IBPS and you can wean the vancies of banks under PCA.So, the vancies may come down from 8862 to 6662.It'll not be a suprise when you see further decrease in vacancies because some banks are also in the radar of RBI to implement prompt corrective action.

note:these vacancies are tentative vacancies and may differ when the official notice will be announced.