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Banks’ aggregate provisions for COVID-19 rise by 23% in June quarter


Even as banks’ provisioning for bad loans tapered in the June quarter following the moratoriums, those on account of Covid-19 surged as compared to the previous quarter ending March. Data from a sample of 27 listed public and private sector banks show that Covid-19 provisioning rose by 22.8% to Rs 16,878.4 crore for the three months ending June.


As a part of the RBI’s regulatory package to address the impact of the pandemic, banks granted a moratorium on interest payments due between March 1, 2020, and August 31, 2020, to eligible borrowers. Banks were also instructed to hold provisions against the potential impact of the pandemic. The 15 private sector banks in the sample reported higher Covid provisioning at Rs 11,175.1 crore compared with Rs 5,703.3 crore for the 12 public sector banks (PSBs). But, PSBs recorded higher provisioning for non-performing assets (NPA) at Rs 29,177 crore compared with Rs 10,370.8 crore for their private-sector peers.


The total NPA provisioning dropped sequentially by 27.7% to Rs 39,547.8 crore. The combined provisioning for NPA and Covid dropped by 17.6% to Rs 56,426.2 crore. Net interest income of the sample rose 15.2% sequentially to Rs 1.2 lakh crore in the June quarter after the 2% drop in March. Gross NPAs of the sample rose by 12.1% to Rs 8.3 lakh crore sequentially and by 7% year-on-year.


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