The buffer (surplus of provisions over specific provisions) will be allowed to be used by banks for making specific provisions for NPAs during periods of system wide downturn, with the prior approval of RBI. It may be added that the banking system has already exceeded the 70 per cent PCR though some banks have yet to reach that level.
With BSP’s policy rates now at record low levels, average interest rates charged by banks to their customers have also dropped to single digit levels. This has benefitted consumers in terms of access to more affordable credit while business is able to expand and create new jobs with lower financing costs.