RBI relaxes provisioning norms for bad loans

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RBI relaxes provisioning norms for bad loans
The Reserve Bank of India has relaxed its non-performing assets (NPA) norms thus providing some relief to the banks. The Central Bank said that banks should maintain 70% of the provision coverage ratio (PCR) of their gross bad loans on retrospective basis since September 2010.

The RBI informed that the lenders do not have to maintain 70% of PCR on an ongoing basis

RBI said that they need to maintain a PCR of 70% of their gross NPAs till 30 September, 2010. After that, they need to follow the standard capital provisioning requirement specified by the Basel committee norms.

RBI has said that the banks would have to set aside money based on the income recognition norms since September 2010 onwards, on incremental NPAs. This varies ranges from 10% initially when the asset is classified as substandard to 100% when it is declared as a loss asset after a few years.

Read more about: bank, rbi, npa, pcr, loans
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