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Lenders build provision buffers to counter future asset slippages

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MUMBAI : Private sector lenders are using the covid-19 pandemic to build a war chest of provisions that would come handy in cushioning against future asset slippages.

Axis Bank has pegged its covid-19 provisions at ₹3,000 crore, while ICICI Bank said it has set aside ₹2,725 crore in the March quarter and HDFC Bank has made additional provisions of ₹1,550 crore.

The Reserve Bank of India (RBI) has asked banks to set aside 10% of those outstanding loans for which a three-month moratorium on repayments was provided.

This has to be done in two tranches of 5% each in the March and June quarters. HDFC Bank has created a good credit buffer to be able to withstand a shock, anticipating that things will start to normalize around May or June, said

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