Levy Precautionary Margin Reserves as PROVISIONS from bad borrowers to save the bank depositors and tax payers from Bad debts.
According to the news report “RBI proposes 100% Bank Provisions”, (ET dated 8th Oct), the central bank’s proposal to introduce minimum provisioning floors ranging from 0.25% to 5% for performing assets—based on asset class and credit risk stage—is a prudent though long overdue step to save depositors and tax payers from subsidising the default borrowers Hope this proposed provision is levied from the borrowers to have a built in mechanism to prevent the formation of NPAs.
Strengthening bank balance sheets through disciplined provisioning and promoting credit quality are essential for maintaining the health of the financial system and safeguarding the interests of all stakeholders, including the government and depositors. Such measures will provide the much-needed foundation for sustainable economic growth.
The Prime Minister’s vision of transforming India into a developed, Atmanirbhar Bharat by 2047 can be realistically achieved through these sensible and sound RBI initiatives, complemented by ongoing fiscal discipline—such as containing fiscal deficits while rationalising Direct Taxes and GST 2.0.
However, these financial measures must be supported by robust governance standards across institutions and public utilities, prioritising ethics, transparency, and welfare. Ensuring low food inflation, a bearable cost of living, equitable wealth distribution, and measurable trickle-down effects of growth are vital. Equally crucial is improving the quality of data on employment, tax compliance, and wealth creation to guide policy decisions effectively and equitably.
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