The largest lender of the country, State Bank of India is likely to receive an extension in the last date for meeting the 70% provision coverage ratio as has been mandated by the RBI.
As per information revealed by a senior SBI official, the bank had wanted time till March 2012 to meet the provision coverage requirements, but RBI was not found to be in favor of giving a two year extension to the bank. However, the apex bank has been found to be willing to lend an extension till September 2011 to SBI.
"We had asked for an extension till 2012. But, the indication is that they would give us time till September, 2011, which should be fine for us," the official said.
Initially the target date for banks to meet the provision coverage requirements was set for September 2010. But finally RBI allowed banks to extend the target date till September 2011.
The provision coverage ratio was increased by RBI on grounds of improving the asset quality of the banking system. Additional provisioning would help the banks to gain some support from the steep loss that had arisen in terms of bad loans owing to the financial meltdown.