Provisions
Loan Loss Provisions
Credit & DebtMoney a bank sets aside from its income against loans it doubts will be repaid. Provisions are charged to the profit and loss statement before profit is struck.
Formula
Provisions as % of Interest Income = Provisions / Interest Income x 100
Why it matters
In a common-size comparison of banks, provisions per Rs 100 of interest income are the single biggest line that separates good lenders from weak ones, because they reveal lending habits directly.
Indian example
Related terms
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