ICICI Bank will set aside extra provisions for part of its agricultural priority sector lending portfolio after the Reserve Bank of India completed its annual supervisory review. The RBI identified that certain credit facilities did not fully comply with regulatory classification norms, prompting the directive. The bank emphasized that this move relates only to the terms of the facilities and not to the credit quality of borrowers.
Addressing concerns, ICICI Bank said, “There is no change in asset classification or in terms and conditions applicable to the borrowers or in repayment behaviour. We are very comfortable with the quality of the book.” The bank clarified that the RBI observation came from a routine annual inspection and does not indicate any stress in the agricultural loan book, which has been consistently standard and secured since 2012.
The review covered an agricultural priority sector portfolio of Rs 20,000 crore to Rs 25,000 crore, part of ICICI Bank’s wider rural loan book of around Rs 83,000 crore. Management added, “These loans are standard and secured. The provisioning requirement for PSL agri loans is different from normal classification and does not reflect the quality of the borrower.” Following the RBI directive, ICICI Bank recognized Rs 12.83 billion in additional provisions during the December quarter, which is a one-time regulatory adjustment. The provisions will remain until the loans are repaid or renewed according to priority sector guidelines and could be reversed once compliance is achieved.
ICICI Bank noted that the additional provisioning affected quarterly profitability and that net profit growth would have been positive without this charge. However, the bank highlighted its strong buffer, including over Rs 13,100 crore in contingency provisions, and stated that its internal provisioning standards are more conservative than RBI requirements. Management expects no further provisions on this portfolio beyond Q3 FY26 and aims to minimize the impact by ensuring loans are repaid and renewed in line with regulatory norms.
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