Mumbai: Reserve Bank of India executive director Anand Sinha on Saturday said RBI could bring down the provisioning requirements of banks, but he did not give any timeframe for it.
Sinha, who was speaking at the Bancon, the annual bankers’ conference that concluded on Saturday, said the high provisioning requirements, which is now at 70% for all the stressed loans, was done at a time when the Indian banks were having good profits.
“It is not meant to be kept at that level,” Sinha said noting that some banks have resented the high provisioning requirement.
“It was part of process that we are adopting … in good times you should set aside more capital while in bad times, you should release more capital. It is a first step that we have taken but we are working out details of it, whether it would be 70% or whatever. It is for building up stock (of capital) in good times ….,” Sinha clarified at the sidelines of the conference.
Sinha also noted that some banks had resented against this high provisioning requirements. However, he did not give any details of when the provisioning requirements would finally come down.