You are here: Home » Finance » News » Banks

Sebi eyes framework for timely disclosure of loan defaults by listed firms

Rs 900 mn Cosmos Bank fraud: NPCI says its systems 'fully secure'

Business Standard

To tackle NPA problem, RBI puts 200 stressed bank accounts under scanner

Some of the accounts include Videocon, Jindal Steel and Power, the official added

Topics
Non Performing Assets  |  Npa  |  Bad Loans

Press Trust of India  |  New Delhi 


RBI, Reserve Bank of India
A woman walks past the Reserve Bank of India (RBI) head office in Mumbai | Photo: Reuters

As part of its effort to contain rising non-performing assets (NPAs), the RBI has started scrutiny of 200 large accounts to assess the level of stress and provisioning done against them by respective .

(RBI) is examining as to whether have followed prudential norms in respect of these stressed assets, a senior public sector bank official said.

It is also assessing classification, provisioning and debt recast in respect of those loans, the official added.

This is a part of a regular annual inspection of the book of the that the central bank undertakes each year after the closure of the financial year, another official said.

Some of the accounts include Videocon, Jindal Steel and Power, the official added.

This exercise comes at a time when gross NPAs in the banking system has risen to around Rs 10.3 trillion, or 11.2 per cent of advances, compared to Rs 8 trillion, or 9.5 per cent of the total loan, as on March 31, 2017.

Following the annual inspection of the last year, many lenders, including Axis Bank, Bank of India and Yes Bank, were caught for under-reporting of NPAs.

The lenders started reporting divergences since June last year for having under-reported NPAs in FY16. This was followed by the second round of disclosures, starting October, of under-reporting in FY17 by a few lenders.

In most cases, this led to a shooting up of NPAs and an ensuing jump in provisions against dud assets. This eroded their bottom lines and led to a sell-off in the stock causing erosion of wealth for investors.

Private sector lenders, which were reputed for their caution on the asset quality front vis-a-vis the poorly governed state-owned peers, were the worst hit in this exercise.

Among others, mid-sized private sector lender was found to have under-reported gross NPAs by a whopping Rs 110 billion in the two financial years, while the third largest lender was found to have a divergence of over Rs 140 billion and had over Rs 50 billion on these accounts for FY16 alone.

Last year, RBI had tweaked the rules to make it compulsory for lenders to disclose under-reporting of . Before this there was a massive book clean-up through the asset quality review (AQR) in the previous year.

First Published: Wed, August 15 2018. 16:47 IST

.