RBI tightens disclosure norms on divergence in NPAs, provisions

Mumbai, October 11, 2022

This threshold will be reduced progressively for UCBs in a phased manner after review, RBI said

Norms that applied to commercial banks on disclosing divergence in asset classification and provisioning will hold good for urban cooperative banks (UCBs) also, the Reserve Bank of India (RBI) on Tuesday said.

The regulator also revised specified thresholds for commercial banks to disclose divergence from this financial year (FY23).

Banks will make disclosures if they satisfy either of the two conditions: First, when additional provisioning for non-performing assets (NPAs) assessed by the RBI exceeds 10 per cent of the reported profit before provisions and contingencies; second, when additional gross NPAs identified by the regulator exceed 10 per cent of the reported incremental gross NPAs.

It gives a leeway to UCBs, for which the threshold for reported incremental gross NPAs will be 15 per cent. This threshold will be reduced progressively for UCBs in a phased manner after review, RBI said.

The disclosure norm will become stricter from FY24. Banks will have to disclose divergence when the GNPAs assessed by RBI exceed 5 per cent of the reported profit before provisions and contingencies.

The disclosure conditions will also kick in if the additional GNPAs identified by the regulator exceed 5 per cent of the reported incremental gross NPAs, it added.

[The Business Standard]