India’s largest lender State Bank of India has disclosed that the Reserve Bank of India detected a divergence of Rs.11,932 crore in the amount of bad loans reported by the bank and those assessed by the regulator.
The bank had disclosed gross non-performing assets at Rs.1.72 lakh crore, while the regulator estimated it at Rs.1.84 lakh crore, the bank said in an exchange notification.
The divergence works out to about 7 percent of the disclosed gross NPAs.
According to existing norms of the RBI, a bank is required to disclose a gross NPA divergence of over 15 percent.
However, guidelines issued by the Securities oral steroids and Exchanges Board of India in November state that banks will have to make disclosures if the divergence amount is more than 10 percent of its profit before provisions and contingencies.
The net NPAs disclosed by the bank for FY19 stood at Rs 65,895 crore, while the regulator’s assessment of net NPAs was higher at Rs.77,827 crore.
Apart from SBI, nine other banks have disclosed asset quality divergence for the financial year ended in March 2019.
Yes Bank, with a gross NPA divergence of Rs.3,277 crore, or 41 percent of its reported gross NPA, was the largest of these.
The bank set aside Rs.1,06,856 crore as provisions against bad loans in FY19, while the RBI assessed provisions at Rs.1,18,892 crore.
The resultant divergence stood at 11 percent.
If the bank had made the provisions as assessed by the RBI, it would have reported a net loss of Rs.6,968 crore for the last financial year, as opposed to a profit of Rs.862 crore.
While explaining the impact of RBI’s review on the current year’s financial performance, SBI said that after adjusting for slippages and upgradations, the impact on gross NPAs in the current year will be Rs.3,143 crore.
The impact of additional provisions required on third-quarter earnings will be Rs.4,654 crore, the bank added.
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