With provisioning requirement raised to 5 per cent by the Reserve bank of India, banks might pass on the expense to their customers, said M. V. Tanksale, Chairman and Managing Director of Central Bank of India
“We will take a hit on our profitability with higher provisioning requirement and, hence, banks will price their products accordingly,” Tanksale said on the sidelines of an IMC event.
The higher provisioning will reduce banks’ internal accruals.
Therefore, banks will be required to infuse more capital, the chairman said.
“In a bank like ours, 50 per cent of the profit gets eroded in provisioning,” he added
Central Bank of India has received the Government’s approval for capital infusion of Rs 2,406 crore, which the bank plans to raise by mid-March through preferential allotment.
Keywords: Central Bank of India, higher provisioning norms, RBI, capital infusion,
Comments:
Let us remind all the CMDs of PSBs that they should be sincere enough to
truly reflect the loan/NPA figures ONLY FROM CBS system-generated. The
Central Auditors of all PSBs should be asked by RBI to certify that the
loans/NPA figures & provisioning etc. are CBS system-generated and the
certificate to the effect should be incorporated in audited balance-
sheet signed by all concerned.
Please Email the Editor