RBI
The Reserve Bank of India (RBI) has updated guidelines on the Prudential Treatment of Bad and Doubtful Debt Reserve (BDDR) for co-operative banks.
Here are the Highlights –
Uniform Treatment: Standardizing the accounting and regulatory treatment of BDDR in line with Accounting Standard (AS) 5.
Expense Recognition: Provisions for Non-Performing Assets (NPAs) must now be recognized as expenses in the Profit and Loss (P&L) account, instead of being appropriated from net profits.
Regulatory Capital: BDDR can be included in Tier 1 capital but should not be used to reduce Gross NPAs for calculating Net NPAs.
Transition Measures: By March 31, 2024, banks must adjust their BDDR balances, reallocating appropriated amounts to NPA provisions or general reserves.
[RBI Notification no. RBI/2024-25/58 dated 02nd August 2024]
