The central bank said the provisioning for each of these quarters may be spread equally over up to four quarters, commencing with the quarter in which the loss was incurred.
Nifty PSU Bank index rose over 2% with all its constituents trading in green in early morning deals. Bank of India, Union Bank of India, Bank of Baroda and Syndicate Bank were up in the range of 3%-4.5%.
This relaxation also comes in the backdrop of the possibility of banks facing huge provisioning burden towards bad loans in the fourth quarter.
While this decision will provide some “relief” to government-owned banks in the short-term, it merely pushes the problem to the new fiscal year that began April 1, analysts said.
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