Explanation:

At least three public sector banks (Union Bank of India, Indian Bank and Central Bank of India) that reported earnings for the January-March 2019 quarter mentioned ‘divergence’ in bad loan recognition and have made provisions for such loans. Divergence takes place when the Reserve Bank of India (RBI) finds that a lender has under-reported (or not reported at all) bad loans in a particular year and hence asks the lender to make disclosures if under-reporting is more than 10% of bad loans or the provisioning. When a loan is not being repaid, the Bank has to reconstitute this Money from its other sources like Profit. Setting aside of money from Profits to compensate a probable loss caused on lending a loan is called Provisioning.
• The provision coverage ratio (PCR) indicates the provision made against bad loans from the profit generated. Higher the PCR, lower is the unexposed part of the bad debts. The PCR of public sector banks has risen steeply from 46.04 per cent as of March 2015 to 66.85 per cent as of September 2018, giving banks cushion to absorb losses. Hence option (a) is the correct answer.
• The asset coverage ratio is a risk measurement that calculates a company's ability to repay its debt obligations by selling its assets. It provides a sense to investors of how much assets are required by a firm to pay down its debt obligation.
• The collateral coverage ratio is equal to the total discounted collateral value divided by the total loan request. Collateral refers to personal and business assets, such as a house, car, office equipment, truck and heavy equipment, inventory, receivables, stocks, bonds and certificates of deposit.
• The liquidity coverage ratio (LCR) refers to the proportion of highly liquid assets held by financial institutions, to ensure their ongoing ability to meet short-term obligations.