Higher provisions for recast loans not to have much impact: BoB

The Reserve Bank of India (RBI)’s revised higher provisioning norms for restructured loans should not have much impact on Bank of Baroda, a top bank official said.

“We don’t think that there will be much impact on bank’s profitability. It may be Rs 100 crore, which is not much for bank,” Bank of Baroda Executive Director P Srinivas told PTI here. He, however, said till the operational guidelines are released by the RBI, it is very difficult to judge the exact impact.

In the second quarter, the bank restructured assets worth Rs 930 crore.

The apex bank has revised the provisioning amount on restructured loans to 2.75 per cent from two per cent earlier to provide more buffer as part of policy review on Tuesday.

 

“We are awaiting the operational guidelines to get a concrete view of the revised norm,” Srinivas said, adding the issues such as period of implementation, whether banks have to provide for the restructured assets at one go or in tranches, will be clear after the guidelines.

On the central bank’s directive to stop funding NBFCs and jewellers to buy gold, Srinivas said BoB is not in that segment.

The public sector lender posted 11.6 per cent rise in net profit at Rs 1,301.39 crore for the July-September quarter on the back of good growth in core income. Total income of the bank rose 19.6 per cent to Rs 9,550.86 crore in the second quarter, compared with Rs 7,985.78 crore a year ago.