Provisioning pressures on banks likely to reduce in FY19, says ICRA

Fresh slippages for the banking sector during Q1 of the current fiscal moderated to Rs 920 billion

The banking industry may see reduced pressure of provisioning for bad loans in FY19 over the previous year, according to rating agency ICRA. 

The credit provisions for public sector banks (PSBs) are estimated at Rs 1.4-2 trillion for FY19, assuming 60-65 per cent provisioning requirements on accounts to be resolved and normal slippages of about 3 per cent. This estimate is nearly half of the actual provisioning level of Rs 2.71 trillion, seen by PSBs in FY18. 

ICRA expects the credit provisions for private banks to reduce to Rs 225-333 billion during FY19 as against Rs 503 billion during FY18. 

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