Breaking the bank

.......The low level of reserves at Indian banks may be encouraging them to fudge the numbers. Most banks reported allowances of less than the RBI’s minimum of 70 per cent of probable losses on total NPAs. At 69 per cent, Indian banks’ average level of reserves of bad loans is far below China’s 252 per cent and Indonesia’s 212 per cent. Setting aside greater provisions will hurt the banks’ bottom lines. But without a bigger buffer, the banks’ bad habits will only worsen.

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