Indian banks set aside Rs 13,653 cr in Covid-19 provisioning

Indian banks set aside Rs 13,653.2 crore for provisions towards moratorium and deferments related to Covid-19 in the March 20 quarter, ETIG analysis shows. This amount was over and above the loan loss provision of Rs 60,058.8 crore made for the quarter raising the total loss provisions by 22.7% to Rs 73,712 crore. This was 15.8% lower than the previous year. COVID provisioning was 18.5% of the total loan loss provisioning in the March 2020 quarter.In April, the Reserve Bank of India stipulated banks to make 10% additional provisioning over a span of two quarters (5% each in the March and the June 2020 quarters) on loan accounts where the facility of 90-day moratorium was given. According to the estimates by SBI Research, 35-40% of the loan portfolio of banks on average is under moratorium. Majority of the banks in the ETIG sample of 31 undertook the entire COVID provisioning in the March quarter and some of them provided beyond the RBI’s mandatory rate. 76721154The top five banks based on the March quarter total interest earned such as State Bank of India (SBI), HDFC Bank, ICICI Bank, Bank of Baroda, and Axis Bank reported COVID provision of Rs 9,023.7 crore or 66.1% of the sample’s total COVID related provisioning.The sample’s loan loss provisioning excluding COVID related provisioning for the quarter was lower than Rs 76,736.1 crore in the previous quarter. This was largely due to fall in provisioning of YES Bank to Rs 4,872 crore from a spike of Rs 24,766 crore in the December 2019 quarter. Excluding YES Bank, the sample’s provisioning increased to Rs 55,186.8 crore in the March quarter from Rs 51,970.1 crore in the prior quarter.Gross non-performing assets (GNPA) of the sample fell to Rs 7.5 lakh crore from Rs 7.9 lakh crore in the previous quarter following reduced pressure of bad loans. “…the moratorium has prevented any loan-account to downgrade and helped banking industry in reining in fresh slippages but the real picture will emerge after the September quarter,” said SBI Research in a report.The aggregate provisions and contingencies, which include provisions for loan loss, restructured advances, standard assets, investment depreciation among other items, increased to Rs 83,071.4 crore in the March quarter from Rs 79,415.4 crore in the previous quarter.

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