Though the Reserve Bank of Bharat (RBI) has mandated banks to reveal the total extent of property lineament stress inwards their books, closed to individual banks, it seems, drib dead on to under-report their bad loan data.
On Friday, YES Bank’s stock toll vicious half-dozen per cent to Rs 1,483.85 on the BSE afterward a disclosure inwards its 2016-17 annual report, which said the RBI audit had pegged its total gross non-performing assets (NPAs) at v per cent for fiscal yr 2015-16 (FY16), against the bank’s ain assessment of exclusively 0.76 pct for the same year.
Analysts every bit good say the under-reporting of numbers is non a phenomenon restricted to YES Bank. Foreign brokerage trace solid Credit Suisse said Axis Bank’s NPAs, according to the RBI audit, were higher at 4.5 per cent of loans versus 1.78 per cent reported yesteryear the depository fiscal establishment inwards FY16, spell ICICI Bank’s reported numbers at 5.85 per cent were lower than the RBI’s figure of 7 percent.
These ii banks are yet to come upward up amongst their annual reports, only disclosed the numbers inwards a conference telephone outcry upward amongst analysts afterward their March 2017 quarter results.
The RBI had asked banks to demeanour an property lineament review inwards the 3rd (Q3) together with 4th quarter (Q4) of FY16, which resulted inwards a seventy per cent jump in their gross NPAs betwixt September 2015 together with March 2016.
On Apr 18, the RBI introduced a dominion that mandated banks to reveal the RBI-assessed bad debt numbers, if the difference betwixt the central bank’s assessment together with the bank’s actual reporting was to a greater extent than than xv percent.
Closing toll every bit on May 12; % loss is compared amongst previous day's closing. Sources: BSE, fellowship data, Credit Suisse estimates In a statement, YES Bank said, “The disclosure on difference inwards property classification together with provisions inwards NPAs inwards the annual audited fiscal disputation is inwards conformity with the RBI round down issued on Apr 18, 2017.”
The difference inwards the NPA information is for FY16. The depository fiscal establishment disputation every bit good added that amongst the ongoing remedial actions undertaken yesteryear the depository fiscal establishment inwards FY17, there direct hold been several reductions, partial sale to property reconstruction companies together with improvement inwards trace concern human relationship conduct, which significantly reduced the overall gross NPA divergence.
According to analysts, the RBI’s audit of depository fiscal establishment numbers typically happens inwards Q3 or Q4 of the subsequent fiscal year, together with therefore, FY16 numbers came upward for scrutiny exclusively inwards the minute one-half of fiscal yr 2016-17 (FY17).
In a report, stockbroking trace solid Macquarie said this raises questions nearly transparency. “While the depository fiscal establishment managed to recover a substantial business office and keep profitability intact inwards FY17, the number is that investors volition inquiry the sanctity of the Rs 2,000 crore of gross non-performing loans (or 1.5 per cent of the loan book) reported for FY17,” Macquarie said, adding, however, that closed to of the loans were ‘current’ inwards YES Bank’s books, according to statutory auditors. But the RBI auditors judged these loans ought to endure termed bad.
“The outstanding gross NPA every bit on March 31 includes i borrower amongst an exposure of Rs 911.5 crore, which is expected to endure recovered inwards the near term. Specific provision held inwards this trace concern human relationship was Rs 227.9 crore,” YES Bank said.
“Therefore, the depository fiscal establishment reiterates that in that location is no carry-forward comport upon of the difference observed yesteryear the RBI inwards FY18 (financial yr 2017-18),” the bank’s disputation said.
The RBI had assessed that the depository fiscal establishment had Rs 4,930 crore of bad loans, against the actual reported Rs 750 crore.
“Given these large divergences, the FY17 RBI audit results volition endure keenly awaited together with the narrowing of these divergences volition endure key for contraction in their valuation gap to the individual consumer banks,” Credit Suisse said inwards a report.
While Axis Bank lost 2.8 per cent, ICICI was downwardly 1.2 per cent inwards Friday’s trades. ICICI Bank did non offering to comment on Business Standard’s query on the number of difference inwards the NPA figures.
An Axis Bank spokesperson said the depository fiscal establishment had made disclosure nearly the RBI’s assessment of gross NPAs for FY16 inwards an interaction amongst the media and analysts afterward its statement of results for FY17.
The Nifty Bank index vicious 0.64 per cent on Friday.
“YES Bank’s numbers direct hold come upward every bit a shock,” said Pritesh Bumb, banking analyst amongst Prabhudas Lilladher.
“It is a temporary phenomenon together with that YES Bank has taken several measures to resolve many NPA cases. Further, it has made plenty provisions together with is well-covered vis-à-vis risks. We stay positive on the individual banking space,” Bumb added.
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