RBI gives banks more flexibility to cover bad loans

The Reserve Bank of India (RBI) on Monday relaxed provisioning rules against bad loans by allowing banks to set aside up to 50 per cent of floating provisions from 33 per cent.

Floating provisions are the amount that banks set aside that are above the mandatory provisioning requirement against bad loans established by the central bank.

The relaxation will be applicable for floating provisions held by them as of the end of December 2014.

Banking stocks extended gains to session high of 1.8 per cent following the news.

(Reuters)