RBI Monetary Policy - new norms for Banks

RBI has recommended that banks to keep the NPA coverage ratio at 70%, including floating provisions. The step was taken in view of the wide disparity on NPA provisioning ratios by different banks.

to advise banks to augment their provisioning cushions consisting of specific provisions against NPAs as well as floating provisions, and ensure that their total provisioning coverage ratio, including floating provisions, is not less than 70 per cent. Banks should achieve this norm not later than end-September 2010.

RBI

The SLR (statutory liquidity ratio) has been hiked by 1% to 25%. SLR is the portion of its deposits that banks are required to invest in government securities. The much expected rise in interest rates has, however, been kept out of the monetary policy announced on 27 Oct 2009.