Provision coverage ratio (PCR): what it means and how to read it
What is Provision coverage ratio (PCR)?
The share of a lender's bad loans that it has already set money aside for.
When a loan goes bad a lender does not lose all of it: some is recovered from collateral or from the borrower. Provisions are the lender's estimate of what will not come back, charged against profit as the loan ages. The coverage ratio says how far along that process the lender is.
A lender with 80% coverage has already taken most of the pain; one with 40% will keep charging provisions for years even if no new loan goes bad. Secured lenders such as housing finance companies can run lower coverage safely, because collateral covers more of the loss.
How it is calculated
A worked example
Why does Provision coverage ratio (PCR) matter?
It is the cushion against losses already known. The higher it is, the less those bad loans can damage future profit.
What is a good Provision coverage ratio (PCR)?
70% or more is comfortable. Below 50% the lender has a lot of loss still to recognise.
Around 70% and above is seen as comfortable for Indian banks, and the best run above 80%. Judge it with the kind of lending: unsecured books need more cover than home loans.
Reading scale
What are the common mistakes with Provision coverage ratio (PCR)?
What is a typical Provision coverage ratio (PCR) in India today?
The median across the 40 listed companies that report it, as of 12 Oct 2026. Half sit above each figure and half below.