The country's largest lender State Bank of India (SBI) disclosed a Reserve Bank of India (RBI) risk assessment report has detected that the public sector bank under-reported bad loans by ₹11,932 crore in the fiscal ended March 2019.
The stock closed in the red at ₹313.45 per share, down 1.04% on a day when the S&P BSE Sensex lost 0.61% to end at 40,239.88 points.
In a notification to stock exchanges, SBI said the RBI found that the divergence in NPA provisioning was ₹12,036 crore in FY19. In effect, the RBI audit findings imply that the bank would have suffered a net loss of ₹6,968 crore versus the reported net profit of ₹862 crore for the previous fiscal.
SBI said the reported divergence would impact its gross NPAs by about ₹3,143 crore, net NPAs by ₹687 crore, and provisions by ₹4,654 crore, during the third quarter of the current fiscal year. The steep divergence between the reported and the actual bad loan numbers suggests the bank's asset quality woes may continue to linger in the quarters ahead.
Markets regulator SEBI mandates listed companies to inform investors of bad loan divergences within a day of receiving the final report from the RBI. The banking regulator requires banks to report divergence in asset quality classification if it is more than 10% of the lender's pre-provisioning profit figure or 15% of the reported NPA.
SBI had beaten street estimates in the second quarter of the current fiscal year. The bank reported its net profit had trebled to ₹3,011.73 on a year-on-year basis. Asset quality improved: gross NPA stood at 7.2% in Q2 versus 7.5% in Q1; net NPA was 2.79% vs 3.07% during the same period.
Yes Bank, Union Bank of India, UCO Bank, and Indian Bank also under-reported bad loans in fiscal year 2019.
