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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.
The 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.
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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