New Delhi: The Reserve Bank of India has proposed a steep hike in provisioning requirement for new restructured standard accounts to 5% from 2.75% with effect from April 1, 2013 due to concerns over rising bad loans, which if implemented will likely hit profitability of banks.
The RBI has also suggested increasing the provisioning need for existing restructured standard accounts in a phased manner, the central bank said in a notification on Thursday.
Accordingly, in case of existing restructured standard accounts as on March 31, 2013, the central bank wants banks to step up provisioning in a phased manner to 3.75% from March 31, 2014, and to 5% from March 31, 2015, it said.
The central bank had last increased the provisioning requirement on restructured standard accounts in November 2012 to 2.75% from 2%. The RBI also said that restructured accounts would be immediately classified as sub-standard with effect from April 1, 2015.
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