Mark-to-market provisions: Banks might once more rap on the doors of the RBI


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Following a significant hit in the June quarter on this account, banks will once more approach the Reserve Bank of India (RBI) for permission to spread provisions toward mark-to-market (MTM) losses across several quarters. According to bank officials with knowledge of the situation, the RBI rejected a similar request from banks in June as a result of projected substantial losses in the first quarter.

To avoid having operational profits impacted by these notional losses, banks will instead request that provisions for such losses be included in provisions and contingencies once operating profits are estimated. According to the banks, this would also provide a more accurate indication of operating performance.

One of the people commented, “This will help in avoiding variations in the operating earnings.”

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