Cumulative loss of 20 public sector banks stands at Rs 14,283 crore in Q4, 2015

The lenders had posted a total profit of Rs 3,918.1 cr in the same quarter last year.

By: ENS Economic Bureau | Mumbai | Updated: May 19, 2016 6:15 am
indian banks, GNPA, Syndicate Bank, Reserve Bank of India, bad debts, Finance news, public sector banks, public sector banks loss, Banking news, Market news, Banking losses, Bad debts, RBI, NPA, Raghuram Rajan, india news The surge in the cumulative provisions of these 20 banks was largely on account of the direction by the RBI to come clean on stressed assets.

The cumulative loss of 20 public sector banks (PSBs) that have declared their Q4FY16 results as of Wednesday has crossed the $2 billion mark. In fact, at Rs 14,283.5 crore, their losses put together, are more than the current market capitalisation of each of them except the largest three.

The main reason behind this negative swing from a total profit of Rs 3,918.1 crore that they had reported in the same quarter last year is a 151.3 per cent surge in provisions, necessitated by their gross non-performing assets (GNPAs) almost doubling (Y-o-Y) to close to Rs 3 lakh crore.

Share This Article
Share
Related Article

The surge in the cumulative provisions of these 20 banks to Rs 39,392.6 crore, which includes Rs 882.6 crore written off by Syndicate Bank on account of an alleged fraud discovered at three of its branches, was largely on account of the direction by Reserve Bank of India (RBI) —following an extensive asset quality review (AQR) — to come clean on stressed assets and make adequate provisions for them in the last two quarters of FY16.

“There are two polar approaches to loan stress. One is to apply band aids to keep the loan current, and hope that time and growth will set the project back on track. An alternative approach is to try to put the stressed project back on track rather than simply applying band aids. This may require deep surgery. But to do deep surgery such as restructuring or writing down loans, the bank has to recognise it has a problem — classify the asset as a non-performing asset (NPA),” Reserve Bank of India Governor Raghuram Rajan had said.

Share This Article
Share
Related Article

The central bank had also asked each member of a consortium of banks to declare an account as NPA if a majority of the other members had done so.

But while provisions surging in the last two quarters of FY16 was anticipated, given the RBI’s diktat, what has come as a surprise is the fact that even banks such as Bank of Baroda, which had categorically said that all required provisions had been made in Q3 itself, reported massive provisioning numbers even in Q4.

“We have put the uncertainty behind us. If something has to be done, it might as well be done now. As far as we can see, we have taken all the required provisions,” PS Jaykumar, its managing director, had said after the announcements of Q3 results. Despite this, the bank reported a loss of over Rs 3,000 crore for the second successive quarter as its provisions rose 11.2 per cent Q-o-Q to Rs 6,857.7 crore.

Punjab National Bank, which reported its Q4 numbers on Wednesday, turned an already miserable quarter for PSBs into a disaster with the highest-ever quarterly net loss by any Indian bank. With provisions almost trebling (Y-o-Y) on the back of GNPAs more than doubling, the New Delhi-headquartered bank reported a net loss of Rs 5,367.1 crore for the quarter and said one in every eight rupees it lent has turned bad.

PSBs’ performance this quarter has also been affected by the fact that while the growth in their non-interest income slowed to 5 per cent (Y-o-Y) as compared to 24.5 per cent in the same quarter last year, their employee expenses, at 6.2 per cent (Y-o-Y), has risen at a faster pace compared to 5.4 per cent (Y-o-Y) recorded in the same quarter last year. FE

For all the latest Business News, download Indian Express App

  1. R
    rbjit singh
    Jun 18, 2016 at 3:30 pm
    In my opinion was caused by low interest magin high npa.lt;br/gt;tighting the banks.you know that no interest is paid in usa.lt;br/gt;the margin of interest rate should be increased.There should be noj pressure of government and approching higher executes for big loans.
    Reply
    1. C
      C.Gopalakrishnan
      May 19, 2016 at 1:43 am
      There sure is the inability of top management in every bank. They tend to p thelt;br/gt;accontability to lower cadre.RBI may take stock of the decision-making capacitylt;br/gt;of the top management in every bank, both for lending and recovery
      Reply
      1. R
        rajnish
        May 19, 2016 at 3:20 am
        Hope ,Apex court next hearing ...igning criminal liability for NPAs booked beyond a threshold.
        Reply
        1. I
          imti
          May 19, 2016 at 2:56 am
          It is the great ability of top management from chief manager to MD to siphon of money for politicians and businesses both retail trade which even today runs on slips while the MSME is hared, as the banks want churn of money than building a string nation like in OECD. The lower cadre initially grudgingly sign off and learn the tricks to apply as they move up the ladder. Looting public money is inbuilt in these so-called officers and they talk big like politicians about ethics and integrity and have ets disproportionate to earnings.
          Reply
          1. S
            s b
            May 20, 2016 at 1:10 am
            Enquires should be conducted in each and every bank, guilty should be suspended and later on jailed if found guilty by the courts. Till this happens, this loot of the country will continue. Supreme Court should take newspapers reports as FIR's and on their own take action to bring the wrong-doers to book. Finance Minister and RBI Governor should be called to parliment to give their version of loot and action taken. Not a single bank official till now booked. Are politicians involved ???
            Reply
            1. L
              Lester Tester
              May 19, 2016 at 5:24 pm
              The primary reason for NPA's is the banks greed. lt;br/gt;lt;br/gt;I will explain. lt;br/gt;lt;br/gt;I have a home loan from a bank. It's now 13 years. It's a floating loan. lt;br/gt;lt;br/gt;I just came to know that there is something called base point reduction by RBI. Meaning banks can reduce your interest. lt;br/gt;lt;br/gt;ONLY IF YOU ASK FOR IT. You have to pay 12k and they will reduce. The savings are huge. lt;br/gt;lt;br/gt;I asked them what is floating interest? Isn't it the same? lt;br/gt;lt;br/gt;Manager gave some silly meaningless explanations. lt;br/gt;lt;br/gt;They are cheats. lt;br/gt;lt;br/gt;I came to know that this base point change occurred 3-4 times in my loan tenor. They never said one word. I could have saved 1-2 lakhs in last 13 years. lt;br/gt;lt;br/gt;I am now going to court. I will expose these criminals who prey on middle cl people.
              Reply
              1. Load More Comments