Bangladesh Bank yesterday introduced a prompt corrective action (PCA) framework to identify the problems of any bank so that they may be tackled at an early stage before becoming acute.

The central bank introduced the framework in line with the Bank Company (amendment) Act, 2023.

The central bank issued a notice in this regard, saying that the PCA is necessary to address the problems of weak banks promptly because early action is critical to prevent adverse impacts.

Besides, Bangladesh Bank introduced the framework to prevent banks from closing down, which is a costly and painful process.

The PCA framework requires a bank and its board of directors to carry out prescribed corrective actions to restore the bank's deteriorated financial and operational conditions to a normal state within a reasonable time.

Under the PCA framework, the concerned bank will have to carry out a schedule of corrective actions directed by the central bank based on selected parameter indicators. This includes the capital to risk weighted assets ratio, tier 1 capital ratio, common equity tier 1 ratio, net non-performing loan ratio and corporate governance.

The provisions of the PCA framework will be effective from March 31, 2025 based on the annual audited financials of the period ending on December 31, 2024.