Mumbai : State Bank of India (SBI), the country’s largest lender, under-reported bad loans by ₹11,932 crore in FY19, a Reserve Bank of India (RBI) risk assessment report has found.
The central bank found that the divergence in provisioning for these non-performing assets (NPAs) stood at ₹12,036 crore in FY19, SBI said in a regulatory filing on Tuesday.
The public sector lender added that had it taken into account the provisions based on RBI’s findings, it would have reported a net loss of ₹6,968 crore instead of its reported profit of ₹862 crore for FY19.
Divergence in bad loans and provisions arise when a bank’s and RBI’s assessments differ.
SBI, however, said the remaining impact on gross NPAs during Q3 FY20 is estimated at ₹3,143 crore since some it has already been recognized in the first two quarters of FY20. Likewise, the remaining impact on provisioning during Q3 FY20 is seen at ₹4,654 crore.
In October, India’s markets regulator Securities and Exchange Board of India (Sebi) asked publicly traded banks to disclose bad loan divergences with the RBI’s assessment within a day of receiving a final report from the banking regulator, tightening norms for asset quality disclosures.
In April, RBI mandated banks to disclose information about provisioning divergence, if it exceeded 10% of a bank’s pre-provisioning profit. Banks were also directed to disclose information if additional non-performing assets (NPAs) were more than 15% of their reported NPAs. Such divergences in asset classification were being disclosed in notes to accounts in annual financial statements following the RBI directive.
Other banks, including Indian Bank, Lakshmi Vilas Bank, Union Bank of India, UCO Bank and Yes Bank also reported divergence in FY19 bad loans numbers.
In October, SBI reported trebling of net profit to ₹3,011.73 crore for the second quarter of FY20 compared with ₹944.87 crore a year ago. Asset quality improved with fresh additions to bad loans nearly halving to ₹8,805 crore at the end of the September quarter from the preceding quarter. Gross non-performing assets (NPAs), as a percentage of total advances, stood at 7.2% in Q2 compared with 7.5% in the June quarter, and 9.95% a year-ago. Post-provisions, net NPA ratio was at 2.79% against 3.07% during April-June, and 4.84% in the year-ago period.