The Reserve Bank of India has been applying the instrument of Prompt Corrective Action (PCA) to deal with banks that generate high net non-performing assets (NNPA) and show a negative return on assets (ROA). Recently, it upgraded the PCA framework by increasing the requirement of total capital adequacy levels and additionally introducing the minimum core equity criteria. The new PCA regime is designed to force PSBs to discipline themselves. Currently, a host of PSBs are under the PCA scanner and may see restrictions on their dividend distribution and branch expansion, besides being compelled to provide higher provisions against NPAs. Research reports indicate that IDBI Bank, IOB, Dena Bank, United Bank, UCO, Oriental Bank of Commerce and Bank of Maharashtra may face PCA, going by their results for the current financial year. So will Corporation Bank, Canara Bank, Allahabad Bank, Central Bank of India, Punjab & Sind Bank, Union Bank, Andhra Bank and Bank of India because of their high NPAs. According to RBI papers, the PCA framework covers three threshold levels. Any breach of capital, asset quality, and profitability levels would risk banks to be bracketed in one of the three threshold levels. Depending on the levels, there are restrictions on dividend distribution, branch expansion, and management compensation. A breach of the third level of threshold of minimum common equity tier (CET) makes it mandatory that the problems of the bank concerned be resolved through the instruments of merger and takeover, reconstruction, and winding up. Banks with the total Capital to Risk (Weighted) Assets Ratio(CRAR) of less than 10.25 percent but more than 7.75 percent fall under threshold 1. Those with CRAR of more than 6.25 percent but less than 7.75 percent fall in the second threshold. In case a bank's CET falls below 3.625 per cent it falls to the third threshold level. The revised guidelines have lowered the net NPA levels to be maintained to avoid PCA. From 10 percent earlier, banks need to have net NPA of lower than 6 percent to avoid PCA. Banks that have a net NPA of 6 percent or more but less than 9 percent fall under threshold 1, and those over 9 percent but less than 12 percent fall under the second level. Banks with net NPA of 12 percent or more fall under the third threshold level. On the profitability front, banks with negative ROA for two, three and four consecutive years fall under threshold 1, threshold 2 and threshold 3, respectively. According to the data available until December 2016, two banks - Dhanlaxmi (9.24 per cent) and Central Bank of India (9.99 per cent) - fall under the threshold 1 level based on the minimum CRAR criteria. Eight banks - Corporation Bank, Canara Bank, Allahabad Bank, Central Bank of India, Punjab & Sind Bank, Union Bank, Andhra Bank and Bank of India - fall under threshold 1 on account of high net NPA. Seven others - Bank of Maharashtra, United Bank, Oriental Bank of Commerce, IDBI Bank, Dena Bank, PNB and UCO Bank - fall under threshold 2 as their net NPAs are 9 percent or more. Only one bank, IOB, falls under threshold 3, with net NPA of more than 12 percent