Stung by a severe fall in its Q4 net profit due to higher provisioning for bad loans, State Bank of India has sought more time from RBI to meet the new requirement of setting aside funds to the tune of 70 per cent of the bad loans. Provision to Coverage Ratio (PCR) is essentially the extent of funds a bank sets aside to cover losses from loans.
The SBI request assumes importance as its profit dropped by a whopping 32 per cent to Rs 1,867 crore in the fourth quarter of 2009-10 even when it raised provisioning only marginally from 56.19 per cent to 59.23 per cent of its total non-performing assets on quarter-on-quarter basis.
ICICI Bank has already got six months relaxation to meet the new norms beyond the RBI stipulated September 2010.
Currently, the PCR varies in between 10 and 100 per cent in the banking sector. As of this March, SBI's the provision against gross NPAs stood at 59.23 per cent while the PCR for its competitor ICICI Bank was 59.5 per cent. In absolute terms, its NPA was to the tune of Rs 26,662 crore and the bank made a provisioning of Rs 15,792 crore.
WE ARE GLAD THAT CENTRAL BANK OF INDIA ALREADY MAINTAINED PCR MORE THAN 70% AS ON 31.3.2010.
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