SBI gets one year, ICICI 6 months for new PCR norm

State Bank of India (SBI), the nation’s largest lender, has got an extension up to September 2011 for increasing its provisioning coverage ratio (PCR) to 70 per cent of its non-performing assets.

Chief Financial Officer and Deputy Managing Director S S Ranjan said the present coverage was 60 per cent. SBI expects to meet the norm before the new September 2011 deadline, he said.

PCR is the ratio of provisioning to gross non-performing assets and indicates the extent of funds a bank has kept aside to cover loan losses. In December 2009, RBI had told all banks to maintain a PCR of at least 70 per cent by September 2010, to enhance their soundness.

SBI’s loan loss provision more than doubled to Rs 5,148 crore in the year to March 2010, compared with Rs 2,475 crore a year earlier. About 3.05 per cent of all SBI loans come under the category of gross non-performing loans and the bank could need up to another Rs 3,000 crore to meet the 70 per cent cover.

ICICI Bank, the country’s largest private sector lender, got extension of six months up to March 2011 to reach the required coverage level. Its PCR was 59.5 per cent at the end of March. Its gross NPAs rose to Rs 19,535 crore at the end of March from Rs 15,714 crore a year earlier.

SBI’s profit in the quarter to March 31 fell almost a third after it increased provision for bad debts, and as costs rose.

Referring to business performance, Ranjan said loan growth in the three months ended June 30, was around 15-16 per cent and the bank expected loans to grow 20 per cent in the year to March 2011. Credit demand is likely to pick up from October on, he said.