SEBI Directive: Banks Start Disclosing Divergence In Asset Classification And Provisioning

United Bank of India, Union Bank of India, Indian Bank and Corporation Bank have so far made disclosure of divergences and provisioning beyond specified threshold in the wake of the recent SEBI directive that Banks have to make such disclosures within 24 hours of receiving the Reserve Bank of India’s risk assessment report (RAR).

With RBI assessing that United Bank of India has to make Rs 1,617 crore more provisions towards non-performing assets (NPAs) for FY2019 , the Kolkata-headquartered public sector bank's net loss widened by the amount of additional provisions made to Rs 3,933 crore.

The Bank, which along with Oriental Bank of Commerce is set to be amalgamated with Punjab National Bank, had to make more provisions due to divergence in NPAs as reported by the Bank and as assessed by RBI.

In the case of Union Bank of India, the RBI's RAR assessed that it has to make Rs 1,588 crore more provisions towards NPAs. The Bank's net loss widened by Rs 1,031 crore to Rs 3,978 crore for FY2019.

South-based Andhra Bank and Corporation Bank are set to be amalgamated with Union Bank of India. In the case of Indian Bank, the RBI's RAR assessed that it has to make Rs 1,004 crore more provisions towards NPAs.

Following this provision, the Chennai-headquartered Bank's reported net profit of Rs 322 crore (after considering the impact of deferred tax asset) for FY19 has turned into a net loss of Rs 333 crore (after considering the impact of deferred tax asset). Kolkata-headquartered Allahabad Bank is set to be amalgamated with Indian Bank.

In the case of Corporation Bank, the RBI's RAR assessed that it has to make Rs 878 crore more provisions towards NPAs. The Mangaluru-headquartered Bank's net loss, as per its stock exchange filing, widened by Rs 611 crore to Rs 6,944 crore for FY2019. Over the course of next few weeks, more banks are expected to disclose divergence in asset classification and provisioning.