State Bank of India on Tuesday conceded that it under-reported gross and net non-performing assets to the tune of Rs 11,932 crore each in FY19. Subsequently, it made fewer provisions, on account of which SBI reported net profits in FY19, while it actually had net losses.
The lender’s humble submission was prompted by the Reserve Bank of India’s annual risk assessment report. Analysts say divergence occurs when a bank’s and RBI’s assessment differs on classification of bad loans.
According to RBI’s assessment, gross NPAs in FY19 should have been Rs 1.84 lakh crore but SBI reported only Rs 1.72 lakh crore. Likewise, net NPAs should have been Rs 77,827 crore against SBI’s figure of Rs 65,895 crore.
Subsequently, provisions should have been Rs 1.18 lakh crore against Rs 1.06 lakh crore provided by the bank. Based on RBI’s report, SBI would have reported a net loss of Rs 6,968 crore in FY19 instead of a profit of Rs 862 crore.
Now that the bad loan pile is truly identified, SBI will have to reflect it in the current quarter.
Rs 3,143 cr
Is the impact on SBI’s gross NPAs in the third quarter of FY20. SBI pegs the hit on net NPAs at Rs 687 crore. The bank will also have to make extra provisions of Rs 4,654 crore this quarter. The move could impact profitability