The 'Prompt Corrective Action' (PCA) framework invoked by the RBI restricts a bank's ability to distribute dividends, expand its branch network, and increase management compensation, but it does not impose any restrictions on the bank's lending activities.

Answer: False

The PCA framework imposes both mandatory and non-mandatory restrictions depending on the severity of the bank's financial breach. Mandatory restrictions explicitly include capping or halting the expansion of the bank's risk-weighted assets (effectively restricting aggressive lending), stopping dividend payouts, and freezing branch expansion. The goal is to force the bank to conserve capital and focus entirely on recovering bad loans and improving asset quality.