Bad loans crisis: Yes Bank, ICICI Bank, Axis Bank under-reported NPAs

Private sector lenders might have substantially under-reported their bad loans, the ensuing provisions and their impact on net profit in FY16, disclosures mandated by the Reserve Bank of India (RBI) revealed. YES Bank, for instance, on Friday said it had under-reported gross non-performing assets (NPAs) to the tune of `4,177 crore in FY16. According to its FY17 annual report, while the bank had reported gross NPAs of Rs 749 crore in FY16, the RBI supervision found the gross NPAs to be at `4,926 crore in the same period. On the net NPA front as well, the central bank found a divergence of Rs 3,319 crore between the bank’s reported numbers and the numbers as assessed by the RBI. This, according to the disclosure, would have led to an increase in provisioning by Rs 858 crore in FY16. Taking into account the additional provisioning requirement, the bank’s net profit for the same period would have been `1,978 crore, instead of `2,539 crore it had reported. “With ongoing remedial actions undertaken by the bank during FY 16-17, there have been several reductions/exits/improvement in account conduct which have reduced the overall gross NPA outstanding to `1,040 crore as on March 31, 2017,” the bank said in its annual report. In a separate statement, YES Bank said there is “no carry forward impact of the divergence observed by the RBI in FY17-18”. Shares of YES Bank on the BSE closed at Rs 1,483.85 crore on Friday, down 6.04% from their previous close. The disclosure is a result of a recent central bank circular mandating banks to report the divergence between the numbers reported by them and as assessed by the RBI for gross NPA, net NPA, provisions and net profit in FY16. Other private sector lenders such as ICICI Bank and Axis Bank have also said the RBI had found NPA divergence in their books. At ICICI Bank, the under-reported gross NPAs stood at `5,105 crore and the additional provisioning requirement stood at `1,071 crore in FY16. Axis Bank told analysts after declaring its Q4 FY17 results that the RBI had found gross NPA divergence of `9,478 crore, thereby taking the total bad loans in FY16 to `15,566 crore. ICICI Bank and Axis Bank have not yet published their annual reports.

ICICI Bank

Yes Bank

Axis Bank