RETAIL BANKING | Staff Reporter, India

Indian banks urged to raise provisions as bad loans mount

Lenders are asked to make provisions at rates higher than the regulatory minimum.

According to Bloomberg, Indian banks, reeling under the world’s worst bad-asset ratio, will have to set aside more funds than required to deal with bad loans from stressed sectors including telecom as brutal competition in the industry erodes profitability.

The Reserve Bank of India in a statement on Tuesday asked lenders to formulate a "policy for making provisions for standard assets at rates higher than the regulatory minimum, based on evaluation of risk and stress in various sectors." The directive singles out the nation’s mobile-phone industry and seeks a review of norms by June 30.

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