RBI to extend provision cover norm on case-to-case basis

The Reserve Bank of India (RBI) had not issued an extension to all banks to achieve 70 per cent provision cover and would treat banks' requirements on a case-to-case basis, said RBI Deputy Governor KC Chakrabarty today.

"We have not extended the deadline as we still have some time left. If some banks have a problem in meeting the requirement, we may consider their request on a case-to-case basis," he said.

ICICI Bank on Saturday said they had received the RBI permission to achieve 70 per cent provision cover by March 31 as against the earlier deadline of September 30. Market analysts have been expecting RBI to allow banks to achieve the provision cover norm by March 31.

He said RBI was optimistic on growth following the good monsoon forecast. “We have said 8 per cent plus growth. Let us first understand the forecasts. What finally happens, we will see it then. This gives a more optimistic picture,” Chakrabarty said. The India Meteorological Department said rainfall this year was likely to be 98 per cent of the long term average, signalling good rains.

Chakrabarty reiterated RBI had not asked banks to refrain from offering teaser rate schemes, but had advised them to ensure transparency and non-discrimination in pricing. “Banks should understand the risks involved and must also communicate this to their customers. They must offer the scheme to all customers, old and new,” he said.