BDDR and Cooperative Banks

Last updated: 27 March 2025
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This document provides a detailed analysis of the RBI's recent circular on the Prudential Treatment of Bad and Doubtful Debt Reserve (BDDR) for cooperative banks. It clarifies the circular's purpose, which is to standardise BDDR accounting, its impact on NPAs and capital, and alignment with accounting standards. The analysis highlights key provisions, identifies ambiguities and contradictions regarding Net NPA computation, the distinction between provisions and reserves, and Tier 1 capital impact. It's an essential read for cooperative bank stakeholders seeking clarity on these complex issues.

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After a close reading of the RBI circular titled "Prudential Treatment of Bad and Doubtful Debt Reserve (BDDR) by Co-operative Banks" issued on August 2, 2024 (RBI/2024-25/58), few pertinent issues arise and that have caused lots of confusion amongst the cooperative banks. Here is a comprehensive analysis of the key provisions, interpretational contradictions, and the anomalies that are creating confusion among stakeholders. #pdf
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Submitted by · Posted 27 March 2025 · Other files by Gokul Rathi · Report
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