Mumbai, May 12, 2017

RBI had assessed that yes Bank had Rs 4,930 crore of bad loans against actual reported Rs 750 crore

Even after asset quality review of the Reserve Bank of India (RBI), private sector banks probably continued to hide a large chunk of their bad assets.

But now those assets are all scheduled to come up in public glare as the central bank recently brought out a rule that mandated banks to disclose RBI assessed bad debt numbers, if the divergence between the central bank’s assessment and the bank’s actual assessment was more than 15 per cent.

Yes Bank Ltd., which raised capital through qualified institutional placement route in the end of March, reported in its annual report that RBI has pegged its total gross NPA at 5 per cent for fiscal year 2015-16, against the bank’s own assessment of only 0.76 per cent for that financial year.

According to Credit Suisse, Axis Bank’s NPAs were higher at 4.5 per cent of loans (vs 1.78 per cent reported) and at ICICI Bank, the NPA numbers were at 7 per cent, against 5.85 per cent reported. These two banks are yet to come with their annual reports.

RBI’s asset quality review last year had shown that banks under-reported about half of their bad loans.

In a statement, Yes Bank said with ongoing remedial actions undertaken by the Bank during FY 16-17, there have been several reductions, partial sale to asset reconstruction companies and improvement in account, “which significantly reduced the overall gross NPA outstanding to Rs 1039.9 Cr as on March 31, 2017.”    

“The outstanding GNPA as on March 31, 2017 includes one borrower with an exposure of Rs 911.5 Crores (88%) which is expected to be recovered in near term. Specific provision held in this account was Rs 227.9 crores,” Yes Bank said.

“Therefore, the bank reiterates that there is no carry forward impact of the divergence observed by RBI in FY17-18,” the bank’s statement said.

RBI had assessed that the bank had Rs 4,930 crore of bad loans, against the actual reported Rs 750 crore.

“Given these large divergences, FY17 RBI audit results will be keenly awaited and narrowing of these divergences will be key for contraction in their valuation gap to the private consumer banks,” Credit Suisse said.

Yes Bank stock closed 6.04 per cent down at 1483.85 apiece, Axis Bank closed 2.80 per cent down at Rs 502.60, and ICICI Bank closed 1.23 per cent at Rs 296.65 a piece on the BSE.

[The Business Standard]