Retail Chronicles 12th

NPA ticking time-bomb
for banking industry
By Vikas Khetan
by Vikas Khetan
ndia’s largest bank, the State Bank of India has reported
ts first quarterly loss in 17 years last Friday which was
hocking for analysts who were busy predicting a over Rs
,000 crores, profits.
orse, Smartkarma Insight Provider Hemindra Hazari
lso reported that the bank misreported its FY17 accounts;
ts net profits should have been lower by 36% and its NPA
igher by 21%.
BI, accounts for a fifth of India's banking assets. The big
ank also admitted that after an audit of its books for the
ast financial year (2016-17), by RBI led to the addition of
s 23,000 crores in its bad loans. This has made SBI join
ther private bank like yes bank etc on its financial
rregularities.
ndian banks by law have to disclose such discrepancies
nd irregularities if the difference between its number
nd those of apex bank number exceeds 15%.Though
nlike the private banks, the reported number was
howing less divergence. This can act as consolation for
he bank which has started its 2018 on such a wrong
ooting. Yes Bank for example last year, had undereported
Rs 6,355 crores.
Eyebrows were raised last year, when HDFC Bank which
is one of the world's most expensive banks on P-T-B basis
and also the first Indian bank to cross the Rs 5-lakh crore
market capitalization-had divergence of 35% in three
accounts amounting to Rs 2,051 crore as on March 2017.
As bad loans have nearly doubled in the past four years
and as economic slowdown has reduced the ability of
companies to repay debt the whole scenario has become a
cycle sort of situation not just reducing the bank ability to
lend more but also India’s bad banking situation. Also, the
bulk of India's Rs 9.46 lakh crore in bad loans were held by
21 state banks questioning the whole lending process in
state unit which is not transparent and clean.
Divergence though is not a new thing, but the changed
thing is that of the mandatory disclosure of the gaps which
were not followed by the bank properly. Also as a part of
tighter asset classification norms, regulators also want to
reclassify loans for all the lenders involved if it was
considered non-performing on the books of one of them.
This is one of the reason for the recent spike in disparity
figures.
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