Provisioning dents PAT for private banks despite high interest income

Net profit fell 1.6% as provision accounts for 44 per cent of private banks' operating profit

Net profit of 17 private sector banks in the September quarter (Q2) fell 1.6 per cent year-on-year to Rs 107.1 billion on account of higher levels of provisioning and contingencies, which on an aggregate grew 8.6 per cent year-on-year.

In February this year, the Reserve Bank of India (RBI) issued new non-performing asset (NPA) guidelines, subsuming all previous mechanisms that had been introduced since 2015.

As a result of uniform guidelines for recognition and resolving ‘bad-loans’ or ‘defaults’, many top players had to raise their provisioning levels compared to last year.

The private banks, like their public sector counterparts, witnessed mark-to-market losses on