Stagger new provisioning norm for recast loans: Bankers to RBI
Mumbai: Bankers Tuesday requested the Reserve Bank to allow implementation of the additional 0.75 percent provisioning on restructured assets in a step-by-step manner.
"We have requested the regulator that the 0.75 percent (additional) provision to be made on the restructured assets, if it can be spread over," Punjab National Bank Chairman and Managing Director K R Kamath told reporters, emerging out of the Mint Road headquarters of the central bank after the customary pre-policy meeting Tuesday evening.
"We requested let it to be spread over. We've requested for a change. Let us see what they come up with," Kamath, who also heads the Indian Banks Association, said.
Bankers were taken by surprise when the RBI in its second quarter policy last October had increased the provisioning for restructured standard assets to 2.75 percent from the earlier 2 percent.
The move, prompted by the massive spike in CDR (corporate debt restructuring) proposals in the current fiscal, was with immediate effect and would show up in the banks' third quarter earnings, which will be reported now.
According to some analysts, the RBI move to increase provisioning will hit the bottomlines by up to 4 percent.
Central bank data say the CDR cases jumped to a high of 392 as of March 2012 from 225 in March 2009, taking the amount at stake to Rs 2,06,493 crore from Rs 95,815 crore.
In an August 31 report, credit ratings agency Crisil had estimated CDR assets to touch Rs 3.25 lakh crore by the end of the current fiscal, with the state-run power utilities and infrastructure companies contributing the most.
As per the RBI data, restructuring of standard assets for the entire system as a whole stood at Rs 1,06,859 crore or 2.66 of gross advances as on March 2011.
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