SBI under-reported bad loans by Rs.11,932 crore in FY19: RBI Risk Assessment Report

According to a Reserve Bank of India (RBI) Risk Assessment Report, State Bank of India (SBI) under-reported bad loans by Rs.11,932 crore in the fiscal year 2018-19. Republic TV has accessed a report of the SBI, which is the country’s largest lender. It has been sent to the National Stock Exchange of India and the Bombay Stock Exchange disclosing the divergence in asset classification and provisioning for non-performing assets (NPAs) as per the RBI’s risk assessment report. This is mandated by Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.  

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A huge divergence of Rs.11,932 crore observed

As on March 31, 2019, SBI had reported gross NPAs worth Rs.1,72,750 crore while the RBI report assessed NPAs to the tune of Rs.1,84,682. This implies that a huge divergence in reporting of bad loans was observed. Similarly, the divergence in the provisioning for the NPAs was Rs.12,036 crore. The massive under-reporting of loans also indicated that the SBI’s declared profit after tax of Rs.862 crore was, in fact, a loss of Rs.6,968 crore. Furthermore, the SBI commented that the remaining impact on the gross NPAs during the third quarter of FY20 was Rs.3,143 crore.  

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RBI and SEBI push for disclosure of information

In April 2019, the RBI had mandated the disclosure of information if the additional NPAs were more than 15% of their reported NPAs. Moreover, it also asked for information pertaining to provisioning divergence, if it exceeded 10% of a bank’s pre-provisioning profit. Normally, divergences in asset classification are disclosed in notes to accounts in annual financial statements. Subsequently in October, the country’s market regulator SEBI tightened norms for asset disclosures. Apart from SBI, several other banks such as Indian Bank, Lakshmi Vilas Bank, Union Bank of India, UCO Bank and Yes Bank have also reported divergence in their bad loan figures for the fiscal year 2018-19.  

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