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BUZZ-Indian banks fall on loan-loss provisioning worries
June 27, 2017 / 5:02 AM / in 6 months

BUZZ-Indian banks fall on loan-loss provisioning worries

** NIFTY PSU Bank index slides as much as 3.5 pct to its lowest since March 24

** State Bank of India falls as much as 3.3 pct to 279.30 rupees, Canara Bank Ltd down as much as 3.7 pct at 326.70 rupees

** India's central bank told banks to set aside at least 50 pct of loan amount for cases referred to insolvency process, The Economic Times daily reported on Monday, citing two bankers familiar with the matter bit.ly/2tgJkLG

** The move could take its toll on banks’ earnings, analysts warn

** RBI identified 12 of India’s top loan defaulters on June 14 and said creditors must pursue bankruptcy proceedings against them

** Banks have already provisioned about 40 pct for NPAs, totalling about 2 trln rupees, or equal to a quarter of NPAs in banking system, before RBI’s move - study by CRISIL Ratings

** CRISIL estimates a 60 pct haircut would be needed on top 50 NPA cases, meaning banks will have to increase provisioning by about 25 pct this fiscal, compared with 9 pct in the last

** Up to Friday’s close, Nifty PSU Bank index has risen 28.3 pct in the last 12 months

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