Mumbai: The country’s largest public sector lender, State Bank of India (SBI), on Monday said its provisions on bad loans are adequate but the cover may be increased if the need arises.
SBI has a provision coverage ratio (PCR) of 38.72%. This being far below the industry average, the Reserve Bank of India (RBI) had recently asked the lender to increase the cover to at least 50%.
“Generally, as per the prudential guidelines, it (PCR) is 40%. But they (RBI) have been indicating that it should be at least 50%,” SBI chief financial officer, S Ranjan, told PTI here.
Ranjan attributed the low provisioning to a single large account, which had earlier been classified as a non-performing asset (NPA).
“That (low PCR) is because one account, Dabhol, got classified as a non-performing asset last year. It will now be re-classified as a standard asset. Automatically, the provision will go up to 43%,” Ranjan said.