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| Some banks ask for PCR deadline extension |
| BS Reporter / Mumbai Feb 12, 2010, 00:00 IST |
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Banks also request RBI to cut savings banks rate.
 Some banks have requested the Reserve Bank of India (RBI) to extend the deadline for meeting the new provision coverage ratio (PCR) norm.
In a meeting with RBI Deputy Governor Usha Thorat, though most banks said they had achieved the norm, some said they might need more time.
“Most banks have met the provision coverage ratio norm, except for one or two. In the case of the latter, RBI may take a call on a case-to-case basis and give some relief. RBI may give them more time to reach the 70 per cent PCR level,” GS Vedi, chairman and managing director of Punjab & Sind Bank, told reporters after coming out of the meeting.
The central bank has mandated 70 per cent PCR and given banks time till September 2010 to comply. While most banks have already crossed the 70 per cent level or are closer to that, as their December quarter results showed, State Bank of India (SBI) is far from that. Its PCR at the end of December was 59.19 per cent. SBI Chairman OP Bhatt had said the bank would need to made an addition provision of Rs 3,000 crore to meet the norm.
RBI has allowed banks to include technical writeoffs while calculating the ratio.
RBI, which has been expressing concern over teaser loans, raised the issue in the meeting. Bankers explained that such schemes were launched to provide a stimulus to the housing sector and were not permanent in nature. “The scheme was launched when interest rates were low and the sector needed a stimulus. But we have told RBI that these schemes cannot go on indefinitely,” said a bank chief who attended the meeting. Union Bank of India has announced that it will prematurely withdraw the scheme from February 15 as against the original deadline of March 31.
Banks again requested RBI to cut the savings banks rate to 2.5 per cent, which is currently at 3.5 per cent. “We requested RBI to either reduce the savings bank rate or postpone the implementation. It will affect our margins and profit,” MV Nair, chairman and managing director, Union Bank of India, said after the meeting.
According to bankers, transaction costs are becoming high in case of savings accounts in cases where the balance is less and transaction volumes are high.
The banks’ wish may not be fulfiled by the regulator. “It looks like it (RBI) is not in favour (of the request),” said a banker.
RBI has asked all banks to offer interest to savings bank customers on a daily basis from April 1.
Currently, the return on savings accounts is determined on the basis of the minimum balance on the 11th day to the last day of the month.
There was also a detailed discussion on infrastructure funding by banks, bankers said. Though banks demanded exemption from cash reserve ratio and statutory liquidity ratio for their lending to the core sector, RBI seemed not very much in favour for this, bankers said.
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