Mark-to-market provisioning relief to lift public sector banks' profits

RBI asking banks to create investment reserve could weigh on financials

The Reserve Bank of India (RBI) has lent a helping hand to the banking sector, especially public sector banks (PSBs), when it allowed them to spread the mark-to-market (MTM) provisioning burden for the October-December 2017 (Q3) and January-March 2018 (Q4) quarters equally over up to four quarters. The Street welcomed the move as the Nifty PSU Bank index, which has been under pressure, gained 1.65 per cent on Tuesday.
 
Owing to a sharp rise in yields (which are inversely related to bond prices) since September 2017, banks had to make additional provisions in Q3 for notional losses due to