New provisioning norms to impact bank profits

The banking system could take a collective hit of around `13,000 crore on bottom-line in the next two years if Reserve Bank of India (RBI) puts in place fresh provisioning norms for restructured loans. To begin with, banks will need to step up provisioning on the existing portfolio of restructured loans – expected to touch `3.25 lakh crore at the end of March this year – from 2.75% to 5% by March 2015. This could cost them an estimated `7,300 crore. Moreover, assuming the recasts continue at a pace of `5,000 crore a month, it would take the portfolio to roughly `4.5 lakh crore by 2015. That could result in additional provisioning requirement of around `6,000 crore.

3 thoughts on “New provisioning norms to impact bank profits

  1. what is portfolio?

  2. The term portfolio refers to any collection of financial assets such as stocks, bonds, and cash

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