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Journalism of Courage
Pushed to the wall by a mountain of bad loans, the public sector banks reported record losses in the fourth quarter of 2015-16, almost equalling the amount of capital infusion by the Centre in PSBs in the entire year. Against a sum of Rs 25,000 crore of capital infusion by the government in the PSBs last year, 27 state-owned banks recorded combined net losses of Rs 23,704 crore in just one quarter (January-March 2016), as per latest data presented by the finance ministry in Parliament.
Had it not been for the Rs 1,264 crore of net profit by the State Bank of India (SBI) during the quarter, PSBs combined losses would have roughly matched the amount of capital pumped in these banks by the government in 2015-16.
Just last month, the finance ministry announced another round of capital allocation of Rs 22,915 crore for 2016-17 in 13 state-owned lenders including SBI and Punjab National Bank (PNB). Out of the Rs 22,915 crore, SBI will get the biggest chunk of Rs 7,575 crore, followed by Indian Overseas Bank (Rs 3,101 crore) and PNB (Rs 2,816 crore).
This is the first tranche of capital infusion for the current fiscal and the ministry has said that more funds would be provided in the year going ahead.
“If additional capital is required by these Banks, we will find the resources for doing so. We stand solidly behind these banks,” finance minister Arun Jaitley had said in the Budget 2016-17.
In the fourth quarter of last year, PNB recorded highest losses of Rs 5,367 crore, followed by Canara Bank’s net losses of Rs 3,905 crore, Bank of India Rs 3,587 crore, Bank of Baroda Rs 3,230 crore, Syndicate Bank Rs 2,158 crore, IDBI Bank Rs 1,735 crore and Uco Bank Rs 1,715 crore, among others. Sixteen out of the 27 state-owned banks recorded losses in January-March quarter.
Barring the State Bank of Patiala’s net loss of Rs 505 crore during the quarter, SBI’s four other associate banks recorded profits.
Other than PNB, which reported its April-June financial results last Thursday, most PSBs are yet to declare their first quarter results.
Country’s largest lender SBI will report its earnings on August 12 and Bank of Baroda on August 11. For the April-June quarter during the current fiscal, PNB reported 58 per cent decline in net profit to Rs 306 crore, as it was forced to make higher provisions out of profits against NPAs.
