Only six PSBs cross ‘desirable’ level of 70% provision coverage ratio

Only six PSBs cross ‘desirable’ level of 70% provision coverage ratio :

While public sector banks (PSBs) have substantially ramped up their loan-loss provisions and strengthened balance sheets in the first nine months of the current financial year, only 6 out of 21 PSBs, have crossed the ‘desirable’ level of 70 per cent provision coverage ratio (PCR) as of December-end 2018.

PCR is the ratio of provisioning to gross non-performing assets, and indicates the extent of funds a bank has kept aside to cover loan losses.

The six PSBs that had over 70 per cent PCR as of December-end 2018 are: Bank of Maharashtra (81.08 per cent), Bank of India (76.76 per cent), IDBI Bank (75.21 per cent), Oriental Bank of Commerce (74.99 per cent), State Bank of India (74.63 per cent), and Bank of Baroda (73.47 per cent).

The five PSBs that were close to the 70 per cent PCR mark as of December-end 2018 are: Allahabad Bank (69.64 per cent), Central Bank of India (69.52 per cent), UCO Bank (69.49 per cent), Punjab National Bank (68.85 per cent), and Andhra Bank (68.47 per cent).

The remaining 10 PSBs have PCR ranging from 58.84 per cent (Union Bank of India) and 66.60 per cent (Dena Bank).

“PCR has gone up because NCLT (National Company Law Tribunal) cases (40 large corporate accounts referred to the tribunal by banks as per the RBI’s list 1 and list 2) have been substantially provided for. So, banks’ balance sheet is getting strengthened.

Source: Business line