RBI begins simultaneous annual financial inspections for banks

Divergence lists for banks have been handed over to lenders, and banks are in discussion with RBI on NPA interpretation

The Reserve Bank of India (RBI) has begun simultaneous Annual Financial Inspections (AFIs) for banks for the 2017-18 financial year with an aim to collate a system-wide note on how much banks are underreporting on bad assets.

The review of asset quality is a key element in this exercise. The central bank has its own yardstick on gauging a bad asset, which may differ from a bank's interpretation of bad debt. For example, a bank may think an asset healthy, but RBI may not. If such divergence in reporting becomes more than 15 per cent of what the bank has declared