State Bank of India (SBI) under-reported bad loans by ₹11,932 crore in FY19, a Reserve Bank of India (RBI) risk assessment report has found.
The bank had reported Rs 65,895 crore net NPAs during the year while the RBI assessed it at Rs 77,827 crore, leaving a gap of Rs 11,932 crore.
In the year ended 31 March 2019, SBI reported a profit of ₹862 crore. The country’s largest public sector bank said had it taken into account the provisions used in RBI findings it would have reported a net loss of ₹6,968 crore.
Divergence in bad loans and provisions arise when a bank’s and RBI’s assessments differ.
As per the guidelines by the Securities and Exchange Board of India (SEBI), banks are now required to disclose divergence in the asset classification and provisioning immediately upon receipt of RBI’s final Risk Assessment Report (RAR).
In the same quarter, the gross non-performing assets (NPAs) assessed by RBI was at Rs 1,84,682 crore compared with Rs 1,72,750 crore in gross NPA reported by the bank.
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.
In July this year, The Reserve Bank of India’s report said that the SBI, among several banks from 2012 to 2015, was found to be flouting several rules in its attempt to cover up non-performing assets (NPAs).
Not only SBI, but Indian Bank, Lakshmi Vilas Bank, Union Bank of India, UCO Bank and Yes Bank also reported divergence in FY19 bad loans numbers.