MUMBAI: More skeletons started tumbling out of the NPA closet, just a day after the RBI tightened NPA provisioning and disclosure norms.
On Wednesday, private-sector lender YES Bank was compelled to unmask its bad loan position and, complying with new RBI norms it reported that its NPAs nearly doubled for the quarter ended March 2017 over the previous quarter. The bad news is that more banks – private and public – could follow suit and the proportion of the Indian banks’ toxic loan mess could pile up further. The sector is already battling sour loans worth over Rs 7 lakh crore.
In absolute terms, YES Bank’s NPAs jumped to Rs 2,018.56 crore during the March quarter ended against Rs 1,005.9 crore just a quarter before. YES Bank made the disclosure in its notes to accounts to comply with regulations that rule out divergence between RBI’s assessment and banks.
On Tuesday, the central bank issued new norms stating that banks have to publish data if provisioning exceeds 15 per cent of published profit after tax or if additional gross NPAs exceed 15 per cent of the published figure in their financial statements for FY17.
“Lately, visible performance has been noticed [on this account]. Interest is being serviced regularly on this account so we have taken this up in the light of compliance for a very brief period, hopefully,” Rana Kapoor, CEO, YES Bank said.
The rise in NPAs was largely on account of one borrower, to whom YES Bank’s gross exposure stood at Rs 911.5 crore. Accordingly, provisions jumped to Rs 309.73 crore.