Mumbai: The RBI on Monday said that banks should disclose bad loan divergences if the additional provisioning has exceeded 10 per cent of the company’s profit before provision and contingencies.
“It is observed that some banks, on account of low or negative net profit after tax, are required to disclose divergences even where the additional provisioning assessed by RBI is small, which is contrary to the regulatory intent that only material divergences should be disclosed. Therefore, it has been decided that henceforth, banks should disclose divergences, if either or both of the following conditions are satisfied---the additional provisioning for non-performing asset (NPAs) assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period, and the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period,” the RBI said in a release. The central bank has altered the additional provisioning requirements, which previously stated that banks should disclose divergences if the provisioning has exceeded 15 percent of net profit after tax.
