The average provision coverage ratio of Public Sector Banks (PSBs) have decreased steadily during last three years while the ratio has increased in case of private banks and was higher for all the three years as compared to PSBs.
In the case of private sector banks, provision coverage ratio at the aggregate level showed an increase from 54.76% during 2007-08 to 63.08% during 2009-10 and in the case of PSBs, the ratio decreased from 52.48% to 47.41%.
Among private banks, Federal Bank, HDFC Bank, J&K Bank, Karur Vysya Bank and YES Bank had relatively higher proportion of provision cover at more than 75% while Lakshmi Vilas Bank is at the lower end of the scale with just 18.68% cover for its gross NPAs during 2009-10.
According to annual report, the bank has adopted suitable risk management practices for managing market risk,credit risk and operational risk taking into consideration the volume and nature of business activities.
Comparatively speaking, the smaller private banks such as Bank of Rajasthan, Dhanlaxmi Bank and Karnataka Bank are relatively weaker wicket on this parameter. Dhanlaxmi Bank has reduced its NPA provision cover at around 44.76% while YES Bank has increased it to 78.42% during 2009-10 from the level of 19.96% during 2007-08.
But Lakshmi Vilas Bank decreased its provision cover to 18.68% in 2009-10 from 52.40% in the year 2007-08. ICICI Bank, the largest private sector bank, steadily increased its provision cover from 52.03 % to 59.48% during the study period.
The provisioning cover of Axis Bank steadily increased from Rs 246 crore during 2007-08 to Rs 570 crore during 2008-09 and further to Rs 899 crore during 2009-10.
State-run banks, on the other hand, appeared less concerned about loss cover. Only one PSB namely Andhra Bank had relatively higher proportion of provision cover at more than 75% during last three years. Indian Bank is at the lower end of the scale with just 22.98% cover for its gross NPAs during 2009-10.
Among the 26 PSBs, a significant increase in provisioning cover during 2009-10 from the level of 2008-09 was observed in the case of Andhra Bank, Bank of India, IOB, IDBI Bank, SB Of Patiala and SBI. A significant decrease in provisioning cover was observed in the case of Dena Bank, Indian Bank and SB Of Travancore.