RBI assessment reveals SBI under-reported bad loans by Rs12,000 crore in FY2019
State Bank of India on Tuesday reported bad loan divergence of Rs 11,932 crore for the last financial year besides disclosing divergence of Rs 12,036 crore in provisioning for the financial year ending March 2019.
 
The bad loan divergence means banking regulator RBI found SBI has under-reported its NPA by Rs 11,932 crore for last fiscal. The gross non-performing assets (NPAs) reported by the bank stood at Rs 1.73 lakh crore as on March 31, 2019. However, gross NPAs as detected by RBI was at Rs 1.85 lakh crore for the period.
 
While the bank provided Rs 1.07 lakh crore against bad loans, the provisioning requirement as assessed by RBI stood at Rs 1.19 lakh crore, the bank said in a regulatory filing.
 
Similarly, the net NPA was Rs 77,827 crore as compared to disclosed figure of Rs 65,895 crore, reflecting divergence of Rs 11,932 crore, it said. 
 
As a result, the bank's fourth-quarter net profit of Rs 838 crore stands adjusted to a net loss of Rs 6,986 crore. This is after taking the additional provisioning into account, and there would be a subsequent impact of Rs 3,143 crore on gross NPAs, Rs 687 crore on net NPAs and Rs 4,654 crore on provisioning against bad loans in the third quarter of the current financial year.
 
The divergences were part of the bank's Risk Assessment Report by RBI for the financial year 2018-19. Market regulator Sebi last month had directed all listed banks to disclose any divergence in bad loan provisioning within 24 hours of receiving RBI's risk assessment report. 
 
Information on divergences is price-sensitive and needs to be disclosed quickly to shareholders, said Sebi.
 
The RBI currently mandates disclosure of provisioning if in the central bank's assessment, it exceeds 10% of the reported profits before provisioning.
 
Earlier Indian Bank, Union bank, Bank of India, Indian Overseas Bank are among the banks who have already announced divergences on their balance sheets on account of divergence reporting of NPAs and provisioning.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    m.prabhu.shankar

    1 month ago

    SBI under-reported means who ? Who is SBI ? Which are the officers who did this ? For whose benefit ? This is a public sector bank. We can understand if its a private bank where they do this to benefit the promoters and shareholders. Officers responsible for this mistake should be hanged in public for misleading the real owners who are the public of Union of India.

    Rajolu Ramam

    1 month ago

    State Bank of India is a Ocean. By merging the subsidiaries, it has become Pacific ocean. No body knows what is happening there. Except reducing the lending rates to please RBI and GOI (reduced 8 times in 2019). Is there any improvement in recoveries of NPAs. That is a big question MARK? Every time we hear only camaflageing of NPAs and increase /decrease of net profit. Has any body came across What was the lending, sector wise and most importantly the recoveries of loans and advances pertaining to Big industries, SMEs, AGRICULTURE AND OTHER PRIORITY SECTOR.

    Meenal Mamdani

    1 month ago

    Since the PSBs are protected by the govt, they don't really care about ordinary depositors. Perhaps the best way to teach them a lesson is for customers to punish them by moving their accounts to banks that don't lie on their financial statements.

    REPLY

    P M Ravindran

    In Reply to Meenal Mamdani 1 month ago

    The solution suggested is practically impossible. It cannot be that there are no provisions for punishment for lying in our statues. I know that there is serious punishment for perjury but I also know that no action is taken even in the grossest cases of perjury.

    Domestic Funding Crunch Making Indian NBFCs to Go for Offshore Financing: Fitch Rating
    India's non-bank financial companies (NBFCs) will look increasingly to offshore financing in 2020 as local funding conditions are likely to remain under pressure, says Fitch Ratings. 
     
    In a report, Fitch says, "We believe that funding conditions within the domestic market will remain relatively tight for NBFCs overall, notwithstanding some improvement since the failure of Infrastructure Leasing & Financial Services (IL&FS) in late 2018. Adding to the liquidity challenges, some NBFCs have a greater sensitivity to higher-risk sectors that will be affected by the slowing economy."
     
     
    However, the ratings agency says it expects offshore access to be confined to larger entities with stronger credit fundamentals. “India's weaker macroeconomic backdrop is likely to add to the existing funding, growth and asset-quality strains weighing on the Indian NBFC industry as a whole, underpinning our negative outlook for 2020,” it added.
     
    According to Fitch, the offshore route would allow better-placed NBFCs to further diversify funding sources after fairly volatile domestic liquidity conditions over the past year, enabling them to capture relative funding-cost benefits and exploit growth opportunities.
     
    The ratings agency views wholesale lenders in particular as more at risk of asset impairments, especially those exposed to property-developer financing and large-ticket loans secured against property. Growth for such companies is likely to be constrained as funding providers continue to pull back from these segments, it added.
     
    Against this background, the ratings agency says pressure for consolidation is high in NBFC segment. It says, "Coupled with tighter industry regulation, this should be positive for market stability in the longer run, and is likely to benefit companies with more resilient fundamentals or those with strong strategic linkages with financially sound corporates. Such institutions should retain better access to financing in the domestic market despite broader sector pressures."
     
    NBFCs will continue to play an important role in India's financial system. Retail-oriented NBFCs are significant providers of credit to the rural areas - where banks are typically less active - and have grown in importance. Those with scale have carved out profitable niches, highlighting the robustness of business models, and have as a result retained access to institutional funding sources. 
     
    "These features support Fitch's stable rating outlook for rated Indian NBFCs. Meanwhile, greater use of securitisation, coupled with asset sales, will continue to help some NBFCs with granular portfolios to generate liquidity as tight funding conditions persist," the report concluded.
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    COMMENTS

    P M Ravindran

    1 month ago

    I do not know how true the graph is. But NBFCs are very high risk investments. The credit rating by CARE and CRISIL are anything but reliable. With our failed justice delivery system Indians are conditioned to suffering atrocities perpetrated on them. It may not be so when investors from developed countries are swindled.

    Rajolu Ramam

    1 month ago

    Offshore financing is not so easy like middle class Indians who invested in companies like IL&FS and DHFL. Down grading DHFL from "AAA" rating to" D"(default) is like magic, a magician does before our eyes. There are many ratings like AA+, AA ETC ETC. How our so called pandit of finance missed. Let them not fool
    off shore investors. The country's rating will come down.

    Rajolu Ramam

    1 month ago

    Offshore financing is not so easy like middle class Indians who invested in companies like IL&FS and DHFL. Down grading DHFL from "AAA" rating to" D"(default) is like magic, a magician does before our eyes. There are many ratings like AA+, AA ETC ETC. How our so called pandit of finance missed. Let them not fool
    off shore investors. The country's rating will come down.

    SBI cuts lending rate by 10 bps to 7.90%
    The State Bank of India (SBI) on Monday announced a 10 basis points cut in one-year marginal cost of funds-based lending rate (MCLR), effective from December 10. It will bring SBI's one-year MCLR down to 7.90 per cent from 8 per cent.
     
    The bank claimed it continued to be the cheapest loan provider in the country.
     
    The Reserve Bank of India (RBI) earlier this month kept the repo rate at 5.15 per cent, barely 40bps higher from the lowest ever. On a cumulative basis, the RBI has slashed lending rates by 135bps since the start of the year.
     
    Monetary transmission, the RBI at its December policy review meeting, said had been full and reasonably swift across various money market segments and the private corporate bond market.
     
    "As against the cumulative reduction in the policy repo rate by 135bps in February-October, transmission to various money and corporate debt market segments ranged from 137bps (overnight call money market) to 218bps (3-month CPs of non-banking finance companies)," RBI said.
     
    The central bank had also said after the introduction of the external benchmark system, most banks had linked their lending rates to the RBI policy repo rate.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

     

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