Asset quality worry

The Mahapatra Committee report had recommended an increase in provisioning on restructured assets from 2% to 5%. But bankers have resisted the move as it will erode their profitability. Final guidelines on restructuring would be released later, but the Reserve Bank said the intention to suggest higher provisioning was to avoid any fragility in the banking system due to cyclical downturns. The asset quality of Indian banks has deteriorated significantly in last four years and the share of restructured advances has increased, barring in 2010-11