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India Asks Banks to Raise Provisions as Telecom Firms Stressed

  • RBI asks banks to raise provision on loans to stressed sectors
  • Telecom sector reporting stressed financial conditions: RBI
A customer holds a SIM card packet while waiting to connect his mobile phone to the carrier Reliance Jio, the mobile network of Reliance Industries Ltd., at a mobile phone store in Mumbai, India, on Monday, Oct. 24, 2016. Mukesh Ambani's Reliance Industries began offering mobile services last month under the Jio brand.
Photographer: Dhiraj Singh/Bloomberg

Indian banks, reeling under the world’s worst bad-asset ratio, will have to set aside more funds than required to deal with bad loans from stressed sectors including telecom as brutal competition in the industry erodes profitability.

The Reserve Bank of India in a statement on Tuesday asked lenders to formulate a "policy for making provisions for standard assets at rates higher than the regulatory minimum, based on evaluation of risk and stress in various sectors." The directive singles out the nation’s mobile-phone industry and seeks a review of norms by June 30.