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Low provisioning poses systemic risk: RBI

The Reserve Bank of India, in its Financial Stability Report, today said banks should create adequate reserves to deal with pension liabilities and avoid approaching the regulator for privileges. The directive comes in the backdrop of revised pension liabilities eating into public sector banks’ fourth quarter earnings in the last financial year. RBI said under-provisioning and non-compliance with accounting standards could pose systemic stability issues. RBI, which has taken up the issue with the Indian Banks’ Association, said, “Banks are also being advised to make a ...