Provision coverage ratio
PCR
The provision coverage ratio is the share of a bank's gross non-performing loans that has already been written off against profit through provisions.
Formula
PCR
Provision Coverage Ratio (%) = Total Provisions ÷ Gross NPAs × 100
Benchmark: Higher is safer; a high ratio means the bad loans have already been paid for
Reading the number
Provisions are the money a bank sets aside from income against loans it doubts will be repaid. The coverage ratio asks what fraction of the recognised bad loans that money covers. At 100 percent, every rupee of bad loans has already been charged to profit, and any recovery from those loans is pure upside. At 40 percent, most of the loss is still sitting on the balance sheet waiting to hit capital.
It is the link between the profit and loss statement and the NPA ratios. In the common-size comparison from the notes, provisions per ₹100 of interest income were the single biggest line separating banks. A bank that provides generously will show lower profit today and a higher coverage ratio, and be the safer bank tomorrow.
Indian example
Related ratios
Glossary terms
From the research
A Comparative Financial Analysis of Three Listed Companies
Three IT services leaders, five years of numbers: similar growth, very different margins and returns on capital, and their October 2026 valuations.
MarketsIPO Issue Price vs. Listing Price vs. Subsequent Performance
Seven of India's most talked-about IPOs since 2021, tracked from issue price to listing to October 2026. Buying on listing day lost money in six of seven.
ValuationPaytm: Valuing a Company With No Clean Comparable
Paytm is part payments processor, part device business, part loan distributor. Why no single peer fits, and how to value it in parts and in reverse.