NEW DELHI: RBI's new draft guidelines for restructured loans are likely to hit earnings of banks by at least 3-8 per cent over the next two years, while some public sector banks are expected to get most impacted, a report by Bank of America Merrill Lynch has said.
Reserve Bank last week issued revised draft policy norms for restructured loans, post the working group (WG) guidelines issued in July, 2012. According to the draft norms, banks would need to step up provisioning on restructured loans by 1 per cent from FY'14 to 3.75 per cent and to 5 per cent by FY'15 on the existing stock of restructured loans.
The norms, if implemented, would be applicable to new restructured accounts with effect from April 1, 2013 and in a phased manner for existing accounts.
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