Many state-owned banks exist because of the state, says Rajnish Kumar

They all default and sit in the front rows of the industry associations: Rajnish Kumar

In an interview to a leading daily, State Bank of India (SBI) Chairman Rajnish Kumar (pictured) hit back at critics of state-run enterprises and their calls for privatising the state-run banks. He said almost all bad loans and poor governance standards cases were from the private sector, “They all default and sit in the front rows of the industry associations. That is the reality today,'' he said. 

Business Standard pulled out the key financials of the listed public sector ones and found for many loss-making banks, the capital infusion in the last five years was almost equal to their accumulated losses. 

In other words, keeping aside the capital infusion by the government, many of these banks could have seriously eroded their net worth, which is equity (mainly infused by the government) and reserves (set aside from profits). 

Take the case of IDBI Bank. Its accumulated loss as of FY17 was Rs 84.92 billion, of which Rs 51.58 billion happened in fiscal year 2017 alone. But in five years, from 2012-13 to 2016-17, government infused Rs 64.84 billion in the bank, virtually rescuing it. About one-fourth of the bank’s loan book was bad debt at the end of December quarter. SBI received capital of Rs 190.5 billion from the government. The largest bank, it is also one of the healthiest. Yet, it showed a divergence of Rs 230 billion in its non-performing assets as reported, against what the Reserve Bank of India auditors estimated.