Paper Number :WP23/2022
Publication Date :Nov. 10, 2022
The Reserve Bank of India has tightened the norms for disclosure of divergence on asset classification and provisioning by commercial banks and also made disclosure norms applicable to Primary (Urban) Co-operative Banks (UCBs). This article describes the concept of divergence, discusses typical reasons for divergence, provides an analysis on divergence reported by large public and private sector commercial banks in the past few years and deliberates upon the implications of the circular. The findings of the study indicate that there has been a decline in the reported divergence by commercial banks in the past few years, indicating an improvement in published asset quality data.