RBI has finally allowed banks to extend the target date for meeting the bad loans provsion coverage ratio of 70% beyond September 2010. The date has been extended till September 2011. But banking majors namely SBI and ICICI Bank have got the extension only till March 2011.

The Central Bank had last year fixed 30th September as the last date for making provisions of 70% for NPAs for all banks. There were some banks which were not able to meet this requirement and the RBI had said that it would be considering them on a case by case basis. The RBI thus finally came to a conclusion that the target date must be extended further.

"The RBI has in principal agreed to extend the date to September 2012. We are still in discussion to work out the modalities of how this could be done," a senior SBI official said.

The bank currently has a bad loan provision of 54% as compared to 40.24% earlier. The final figures would be finalized after the auditing of the fourth quarter financials is complete.

ICICI Bank has made a provision of Rs. 990 crore for the fourth quarter of 2009-10 but it is still lesser than what it had made in the first quarter of the year. The current provision coverage ratio of the bank is 59.5%.

"The RBI has in principal agreed to extend the date to September 2012. We are still in discussion to work out the modalities of how this could be done," a senior SBI official said.

Provision coverage ratio of Indian Overseas Bank is 53%. "We have not made any representation to the RBI, but if some banks are getting extension, we will also consider putting in a request, so that our profits do not get affected," a senior IOB official said.

Canara Bank and Dena Bank have been able to meet the 70% target after the RBI allowed them to include technical writeoffs in the provision coverage ratio.

"After this circular, we have intimated the central bank that we do not need any special dispensation as we have already crossed the requirement," said RL Rawal, chairman and managing director of Dena Bank.

"After including technical write-offs, we now have a provision coverage of 74 per cent. We will maintain it at this level as we expect to see accretion of fresh NPAs in the fourth quarter ,"a senior Canara Bank official said.