The Reserve Bank of India has found that State Bank of India (SBI) has under-reported bad loans by Rs 11,932 crore during the financial year 2019.
The SBI, in an exchange filing, said that the RBI assessed the bank's gross non-performing assets at Rs 1,84,682 crore in FY19. The bank had disclosed gross NPAs of Rs 1,72,750 crore, resulting in a divergence of Rs 11,932 crore.
As per the RBI risk assessment report, the level of net NPA stood at Rs 77,827 crore as compared to disclosed figure of Rs 65,895 crore, resulting in divergence of Rs 11,932 crore.
Divergence in bad loans and provisions occur when the bank's and RBI's assessments differ.
Due to divergence in reporting of bad loans, the bank has to make additional provisioning of Rs 12,036 crore in the balance sheet. As a result, the adjusted net loss of the bank would be at Rs 6,968 crore instead of its reported profit of Rs 862 crore for FY19.
Similarly, the remaining impact on provisioning during Q3 FY20 is expected to be Rs 4,654 crore.
For the year ended March 2019, SBI reported a net profit of Rs 862 crore after reporting losses in the last two years, helped by higher net interest income and improvement in asset quality.
SBI's asset quality improved in FY19 with gross non-performing assets (NPAs) ratio - bad loans as a percentage of gross advances - stood at 7.53 per cent versus 10.91 per cent in the previous year. Net NPA was reported at 3.01 per cent as compared to 5.73 per cent in the corresponding period last year.
Earlier in October this year, Securities and Exchange Board of India (Sebi) had directed stock exchange listed banks to disclose bad loan divergences with the RBI's assessment within a day of receiving a final report from the central bank.
Recently, many other banks, including Yes Bank, Indian Bank, Lakshmi Vilas Bank, Union Bank of India and UCO Bank also reported divergence in bad loans for FY19.
Weighed down by the development, shares of State Bank of India slipped 1.04 per cent to Rs 313.45 apiece on the Bombay Stock Exchange.
Edited by Chitranjan Kumar