Indian norms on PCA, capital are conservative: SBI report

Indian regulations on capital requirements, provisioning for sour assets and prompt corrective action (PCA) restricting regular activities by lenders are conservative and rule-based, SBI's research wing has said in a report.

It did not call for any relook in the report which comes amid a heated debate between the Government and the RBI over such aspects.

"Whether a rule-based or a discretion-based approach works better remains a matter of empirical debate till date," it said, while commenting on the PCA and provisioning norms.

It compared the Indian PCA framework -- which was set in last year and has impacted 11 state-run lenders so far which have a high net non-performing-assets ratio, negative return on assets or lower capital buffers -- with the US' FDIC.

The report, released on Monday, said being traditionally more conservative helps in withstanding crisis and early recognition of the problem leads to timely corrective measure.

(with news agency inputs)