The Reserve Bank of India said on Monday it will soon come out with norms for banks to augment the capital requirements that the lenders have to keep aside against bad assets.
"We will be issuing the circular (provisioning against NPAs) so you can then see details on that," RBI deputy governor Usha Thorat told reporters in New Delhi. When asked about the timing of the circular, she said, 'soon.'
RBI governor D Subbarao, in the second quarterly review of the monetary policy in October, had said there is need to increase provisioning against bad assets to not less than 70 per cent by September 2010.
"It has been advised to banks to augment their provisioning cushions consisting of specific provisions against NPAs as well as floating provisions, and ensure that their total provisioning coverage ratio, including floating provisions, is not less than 70 per cent. Banks should achieve this norm not later than end-September 2010," Subbarao said.
The quarterly review noted that at present, the provisioning requirements for NPAs range between 10 per cent and 100 per cent of the outstanding amount, depending on the age of the NPAs, the security available and the internal policy of the bank.
