Work out provision coverage ratio instantly with clear inputs, formula shown and shareable results.
Provision coverage is the share of impaired loans already written down through the profit and loss account. A high ratio means future write-offs are largely absorbed, so reported profits are less exposed to legacy problems.
Provision coverage
PCR = provisions held / gross NPA; shortfall = target × gross NPA - provisions
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
Regulators and analysts commonly look for 70% or more, higher for unsecured exposures.
It depresses current profit, but it also front-loads pain and makes recoveries flow straight to earnings later.