Increased provisions for restructured loans will not affect profitability: BoB
By Vaibhav Aggarwal
Nov 5, 2012
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The public sector lender, Bank of Baroda, has said that the new, increased provisioning requirements for restructured loans introduced by Reserve Bank of India will not have any adverse impact on the bank's profits.

On the matter, the Executive Director of Bank of Baroda, Mr. P. Srinivas said, "We don't think that there will be much impact on bank's profitability. It may be Rs 100 crore, which is not much for bank." Though he also added that till the central bank releases the operational norms on the subject, it is hard to gauge its exact impact on bank's profitability.

It is reported that the bank recorded restructured loans worth Rs. 930 crore in the second quarter of the current fiscal.

It should be noted that recently RBI revised the amount required to be set aside as provisions for restructured loans to 2.75 percent, an increase of .75 percent from the earlier provisioning requirement.

Mr. Srinivas added, "We are awaiting the operational guidelines to get a concrete view of the revised norm." He also said that the matters relating to tenure of implementation and whether banks have to make the provisions in one go or in tranches, will be known only after the guidelines are formally released.

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