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translateGLOSSARY · BANKING

What is Provisioning Coverage Ratio (PCR)?

PCR is the percentage of bad loans (NPAs) for which a bank has already set aside provisions from its profits.

PrepClever Glossary · Banking

updateUpdated July 2026

Formula

PCR = Provisions Held ÷ Gross NPAs × 100

The Provisioning Coverage Ratio shows how well a bank is buffered against its bad loans. A higher PCR means most potential losses are already provided for, so the balance sheet is healthier and future earnings are less exposed to NPA shocks.

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Example

A bank that has provided ₹70 crore against ₹100 crore of gross NPAs has a PCR of 70%.

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Relevant NISM series

RBI Grade BCAIIBIBPS PO

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Related Terms

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Glossary

Non-Performing Asset (NPA)

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Glossary

Capital Adequacy Ratio (CAR)

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FAQs about Provisioning Coverage Ratio (PCR)

Is a higher PCR better?add

Generally yes — a higher PCR means the bank has already absorbed most of the expected losses on its bad loans, making its reported book value and future profits more reliable.

Where to go from here

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