Loan-Loss Provisions in Indian Banks: An Appraisal of Institutional Attributes

Pillai, K R and Mathew, Linsy (2017) Loan-Loss Provisions in Indian Banks: An Appraisal of Institutional Attributes. Indian Journal of Finance, 11 (10). pp. 7-19. ISSN 09738711

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Abstract

The financial systems of a nation, being the lifeline of its economy, is expected to have ample preparation to confront and mitigate any shock inherent in market-driven business. Loan-loss provisioning a systematic way of handling risks rationally, signaling the managerial prudence. Banks across the globe follow a dynamic provision policy. Sometimes, a well-designed policy is not enough to safeguard the interests of all the stakeholders. One such prominent and time-honored modus operandi to face contingencies is the rate of provisioning to be set aside annually to meet any contingencies. The proposed study attempts to report the chronological trend in provision in Indian banks in the latest decade. Data for the study were collected from CMIE online database. Bank size and nature of ownership were considered to be predictors of provision. Findings of our study reveal that the size of the banks influence the rate of provisions set aside. The study also enlightens a clear distinction among the banks ranked high on the basis of size than medium and low ranked banks. We also recognize the global economic downturn as an uncontestable constituent to increase the percentage of provisions across all the sectors of the financial industry

Item Type: Article
Uncontrolled Keywords: Indian banks, Banking provision, Loan-loss provision, Loan-loss reserve, Financial performance, NPA, Distressed loans, Banking failure
Subjects: Management > MIM Manipal
Depositing User: MIM User
Date Deposited: 19 Oct 2017 09:11
Last Modified: 19 Oct 2017 09:11
URI: http://eprints.manipal.edu/id/eprint/149842

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