Prompt Corrective Action (PCA) is a framework established by the Federal Deposit Insurance Corporation (FDIC) to identify and address capital deficiencies in insured depository institutions (IDIs) . The PCA framework is designed to ensure that IDIs take timely and appropriate actions to address capital deficiencies and avoid becoming insolvent. The PCA framework includes mandatory and discretionary supervisory actions that can be taken by regulators based on an IDIs capital levels.

Some key features of the PCA framework include:

• Capital Categories: IDIs are classified into one of five capital categories based on their capital levels. The categories range from "well capitalized" to "critically undercapitalized".

• Mandatory Actions: Regulators are required to take certain actions when an IDIs capital levels fall below certain thresholds. For example, if an IDI becomes "undercapitalized," regulators must require the IDI to submit a capital restoration plan.

• Discretionary Actions: Regulators have discretion to take additional actions based on an IDIs capital levels and other factors. For example, regulators may restrict an IDIs activities or require it to raise additional capital.

The PCA framework applies to all IDIs, including banks and credit unions. The framework is periodically reviewed and modified by regulators to ensure its effectiveness.