Public Sector IDBI Bank’s gross non-performing assets (NPAs) of Rs 24,875 crore in 2015-16 were lower than the Reserve Bank of India’s assessment of Rs 31,691 crore, indicating an under-reporting of Rs 6,816 crore.
This was disclosed in the bank’s latest Annual Report released earlier this week.
According to the Annual Report, there was also divergence in the amount of provisions set aside by the bank in fiscal 2016. While the bank set aside Rs 10,232 crore in provisions, the RBI pegged the provisions at Rs 12,292 crore.
On April 18, to ensure greater transparency and promote better discipline with respect to regulatory compliance, the RBI has asked banks to make suitable disclosures wherever the additional provisioning requirements assessed by the RBI exceed 15 per cent of the published net profits for the reference period or the additional gross NPAs identified by the RBI exceed 15 per cent of the published incremental gross NPAs.
“There have been instances of material divergences in banks’ asset classification and provisioning from the RBI norms, thereby leading to the published financial statements not depicting a true and fair view of the financial position of the bank,” the RBI had said.
Many public and private banks had showed divergence in NPA calculation. Yes Bank officially reported a gross NPA figure at Rs 750 crore as against the RBI’s assessment of Rs 4,925.7 crore for the fiscal ended March 2016.
The Reserve Bank of India (RBI) recently invoked its prompt corrective action (PCA) framework on IDBI Bank because of its rising bad loans and negative return on assets. In the year ended March 2017, the bank posted a net loss of Rs 5,158 crore as against net loss Rs 3,665 crore in fiscal 2016. The bank’s gross NPAs almost doubled to 21.25 per cent of the gross advances in the fourth quarter of the last fiscal compared to 10.98 per cent in the corresponding period of the previous financial year. The net NPAs were 13.21 per cent against 6.78 per cent.
The RBI’s Financial Stability Report (FSR) indicated that there might be further downward risks jeopardising the central bank’s estimate for asset quality. Even as gross non-performing assets (GNPAs) rose between September 2016 and March 2017, the stressed advances ratio declined. The overall capital to risk-weighted assets ratio (CRAR) of the banking system also improved to 13.6 per cent from13.4 per cent during the period, largely due to an improvement in the capital adequacy of private and foreign banks. The projection for banks’ capital position was more dire. The report said as things stand now, two banks may have CRAR below the minimum regulatory level of 9 per cent by March 2018.