The government and the LIC has planned to sell approximately 65% of their stakes in the IDBI bank, although the Cabinet Committee had, in May 2021, approved a 100% disinvestment by both the stakeholders. The IDBI bank has been struggling with its worsening financial situation, continuously rising bad loans, and declining debt to capital ratios. The bank came into the purview of the Reserve Bank of India in 2017, which immediately brought the bank into the prompt corrective action framework.
Introduced in 2002, the PCA is an initiative of the Reserve bank to identify banks that have been performing poorly, locate its key causes of concerns and work towards improving its conditions. PCA usually targets banks with weak financial status or mismanagement under this framework . The framework imposes a set of guidelines that the bank has to follow for a certain period of time under the supervision of the RBI. No bank under the PCA Framework can breach the guidelines that have been imposed on it.