Banks have asked the reserve bank of India to include loan write-offs in the 70 percent NPA provisions as mandated by the apex bank.

RBI had asked banks to increase provisioning requirements for doubtful debts in a span of one year. According to CRISIL, this would result in an additional provisioning of Rs 13,000 crore. Presently, banks have loan loss coverage of 51 percent.

RBI had said, "With a view to improving the provisioning cover and enhancing the soundness of individual banks, it is proposed 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."

A public sector bank chief pointed out that banks expressed difficulty in adhering to the RBI direction of increasing the provisions in a year's time.

The banks that approached RBI include State bank of India which is expected to provide Rs. 4000 crore towards the provisions. However, RBI is said to have turned down their demands since it held a view that the banks' profitability was increasing by 35-40 percent and it was the right time to increase the cushion against bad debts.

A bank chief said, "We have requested for allowing the provisions that are extinguished on account of prudential write off to be reckoned as PCR (provision coverage ratio)." On this, another public sector bank chairman said that the RBI had assured them to reconsider the matter.

Another bank chief complained that there was no need of introducing such strict regulations when the banking system was doing very well.

Banks that have lower PCR include Canara Bank (27.8 per cent), Dena Bank (37.8 per cent), State Bank of India (45.1 per cent), Indian Overseas Bank (48.6 per cent) and ICICI Bank (51.9 per cent).