Provisioning under IBC not unusually high: RBI Deputy Governor

RBI has directed banks to set aside 50% cover in the form of provisions for the cases referred for insolvency proceedings

Provisioning under the Insolvency and Bankruptcy Code (IBC) was not unusually high and would improve long-term credit quality of banks, 

N S Vishwanathan, deputy governor, Reserve Bank of India (RBI), said in Kolkata on Friday.

The RBI has directed banks to set aside 50 per cent cover in the form of provisions for cases referred to the National Company Law Tribunal (NCLT) for insolvency proceedings.

“A strong insolvency code would improve the long-term credit quality of banks, and will place banks on a firm footing. Also, the provision only meant expected loss, and banks would write back in case of recovery,” said Vishwanathan,