Moratorium: 10 pc provisioning may shave Rs 35,000 cr off bank profits

The Reserve Bank of India's directive asking banks to make 10 per cent provisions on all moratorium loans will shave at least Rs 35,000 crore off their profitability in financial years 2019-20 and 2020-21, according to a report.

On Friday, the central bank, in its second set of liquidity-enhancing measures announced Rs 1 lakh crore specifically targeted fund infusion to small- and mid-sized shadow banks, home financiers and micro-lenders, which will ultimately go a long way in offering some succour to the small and medium enterprises.

"While the liquidity boosters will help the small lenders, the RBI has also stipulated banks to create a 10 per cent provisioning on all loans that are overdue but not yet NPAs (non-performing assets) wherein the moratorium is on, over the March and June quarters. This will impact their profitability by Rs 35,000 crore in the March and June quarters," Brickwork Ratings said in a weekend note.

The new provisioning requirement has to be made for the March .