Date for bad loan provision ratio extended beyond Sept. 2011

RBI has ultimately permitted banks to increase the target date for meeting the bad loans provision coverage ratio of 70% after September 2010. The date has been increased till September 2011. But banking giants viz. SBI and ICICI Bank have obtained the extension only up to March 2011.

Last year, the Central Bank had set 30th September as the date for making provisions of 70% for NPAs for all banks. But few banks could not fulfill these conditions and so RBI had said that it would be looking at them on a case to case basis. Ultimately, RBI decided that the target date must be increased further.

A top SBI official said, “The RBI has in principal agreed to extend the date to September 2012. We are still in discussion to work out the modalities of how this could be done”.

The bank’s prsenet bad loan provision is 54% as against 40.24% previously. The ultimate numbers would be confirmed after the auditing of the 4^th quarter financials is over.

ICICI Bank has made a provision of Rs. 990 crore for the 4^th quarter of 2009-10 but it is still below than what it had made in the 1^st quarter of the year. The present provision ratio of the bank is 59.5%.

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