Banks of lower than 8 percent capital are “under capitalized” and the correction actions include “may not take trust deposits; may not make any capital distribution or pay a management fee; growth of total assets must be restricted; must submit capital restoration plan and prior approval is required to acquisitions, branching, and new lines of business and some discretionary actions”.
According to the IMF2, 15 per cent of Low-Income Countries (LICs) are estimated to be already in debt distress, with an additional 45 per cent at high risk of debt distress. About 25 per cent of Emerging Market Economies (EMEs) are also at high risk.