PSBs provision coverage ratio dips to 52.06%

Written by Pradip Kumar Dey | Mumbai | Updated: Dec 12 2008, 04:15am hrs
The average provision coverage ratio of public sector banks (PSBs) has fallen to 52.06% as of March 31, 2008, from 60.86% on March 31, 2006. Banks such as Corporation Bank, Union Bank of India, Bank Of India, Andhra Bank and State Bank of Mysore had relatively higher proportion of provision cover at more than 75%. Canara Bank stands at the lower end of the scale with just 26.36% cover for its gross NPAs during 2007-08. According to the directors report of the bank, continuous focus on quality of assets, aided by a prudent risk management mechanism, has facilitated progressive improvement in Canara Banks assets quality.

Larger PSBs such as Canara Bank, IDBI Bank and Uco Bank are relatively on a weaker wicket on this parameter. IDBI Bank, for instance, has reduced its NPA provision cover at around 30.79% while Union Bank has increased it to 91.21% during 2007-08 from 59.71% during 2005-06. But Canara Bank decreased its provision cover to 26.36% in 2007-08 from 43.1% in the year 2005-06. SBI, the largest public sector bank,decreased its provision cover marginally from 48.99% to 42.17% during the period. Among the 24 PSBs, a significant decrease in provisioning cover during 2007-08 from the level of 2006-07 was observed in the case of Punjab & Sind Bank (-68.8%), State Bank of Hyderabad (-55.3%) and OBC (-41.1%). There was increase in provisioning cover in the cases of Union Bank (19.7%), SBI (14.2%) and Uco Bank (13.5%).

The provisioning cover of OBC decreased from Rs 1,941 crore during 2005-06 to Rs 1,225 crore during 2006-07 and further to Rs 721 crore during 2007-08.

Out of 24 PSBs, five banks namely Corporation Bank, Union Bank, Bank of

Maharashtra, Bank of India and State Bank of B&J showed a steady increase in loan loss cover during 2007-08 from the level of 2005-06. Fifteen PSBs have exceeded the average loan loss cover (52.06%) of 24 PSBs in 2007-08.