RBI ups provisioning on select types of non-performing loans
May 03 2011
Source : Yahoo Finance India
Mumbai, May 3 (PTI) The RBI today tightened the provisioning requirement for banks on certain types of bad and restructured loans as part of its prudential provisioning framework.
Banks'' bad loans are classified into three categories -- sub-standard, doubtful and loss.
The advances classified as ''sub-standard'' will now attract a provision of 15 per cent as against the existing 10 per cent, the apex bank said in its monetary policy statement for FY12 here.
However, a provision of 40 per cent has been prescribed for the secured portion of advances which remained in the ''doubtful'' category for more than one-year but up to three years. The existing provision is 30 per cent.
In the case of restructured accounts classified as standard advances, provisioning has been increased to 2 per cent in the first two years from the date of restructuring as against the existing range of 0.25-1 per cent, depending upon the category of advances, the RBI said.
In the case of restructured accounts classified as non-performing advances, when upgraded to the standard category, banks will now have to make a provision of 2 per cent in the first year from the date of upgradation as against the existing provision of 0.25-1 per cent, the apex bank said. (MORE) PTI JJ NSK