Private lender YES Bank has reported a disclosure in divergence of Rs 4,176.7 crore in gross non-performing assets (NPAs) in the annual report of the bank.
The 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. In the same period, net NPAs declared by the bank stood at Rs 284.5 crore, while the RBI assessment showed a substantially high number of Rs 3,603.1 crore. The divergence in net NPAs stood at Rs 3,318.7 crore and gross NPAs at Rs 4,176.7 crore.
YES Bank shares fell 6.04 per cent to Rs 1,483.85 on the BSE on Friday. “We need clarity as to whether other private banks also under-reported their NPAs,” said a market source.
In a statement, the bank said the disclosure on divergence in asset classification and provisions in NPAs in the Annual Audited Financial statement is in conformity with the RBI circular issued on April 18, 2017. The reported divergence was for the prior period ended FY 15-16. “With ongoing remedial actions undertaken by the bank during FY 16-17, there have been several reductions, exits, partial sale to ARCs/ improvements in account conduct which significantly reduced the overall gross NPA outstanding to Rs 1039.9 crore as on March 31, 2017,” YES Bank said.
“The outstanding gross NPAs as on March 31, 2017, includes one borrower with an exposure of Rs 911.5 crore (88 per cent) which is expected to be recovered in the near term. Specific provision held in this account was Rs 227.9 crore,” the bank said.
After duly taking into account provision impact of the divergences, the bank’s credit cost was at 53 basis points (bps) for FY17 and 19 bps for Q4FY17, it said. “Therefore, the bank reiterates that there is no carry forward impact of the divergence observed by the RBI in FY17-18,” it said.
“The net profit of the bank would have come down had the bank made provisions on the basis of the RBI assessment,” said a financial sector analyst.
Last month, YES Bank said its March quarter net profit rose 30.2 per cent to Rs 914.12 crore as compared with Rs 702.11 crore a year ago. The bank’s gross NPAs rose 100.68 per cent to Rs 2,018.56 crore at the end of the March quarter from Rs 1,005.85 crore in the December quarter.
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 said.
The rise in bad loans is not restricted to public sector banks alone. Gross NPAs of top 9 private sector banks in the country have gone up by almost three times in the last two years, says a Care Ratings study. Gross NPAs of these banks were at Rs 78,991 crore as of March 2017, up 199 per cent from Rs 26,455 crore in March 2015.