 "Banks")
A day after market regulator Sebi put in place tighter disclosure norms, Lakshmi Vilas Bank and two other lenders on Friday reported divergence in their bad loans for the last fiscal ended March 2019.
Sebi on Thursday had directed all listed banks to disclose any divergence in bad loan provisioning within 24 hours of receiving RBI's risk assessment report, rather than waiting to publish the details in their annual financial statements.
As per the disclosures made by the lenders through exchange filings, state-owned Indian Bank has reported a divergence of Rs 820 crore in its net non-performing assets (NPAs) for 2018-19, while that for Union Bank stood at Rs 998.70 crore.
Private sector Lakshmi Vilas Bank (LVB) said its net NPA divergence was to the tune of Rs 54.9 crore in the last fiscal.
The gap in the NPA position also had an impact on the profit/loss metrics for the fiscal ended March 2019.
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Thus, Union Bank of India reported widening of its net loss to Rs 3,978.37 crore for FY19 from Rs 2,947.45 crore earlier.
In case of Indian Bank, the bank suffered a loss of Rs 333.21 crore (after considering impact of DTA -- deferred tax assets) as against a net profit of Rs 321.95 crore reported earlier.
For LVB, the net loss widened to Rs 1,006 crore from Rs 894 crore.
"Out of the divergence in provisioning amount of Rs 111.90 crore, bank has already considered an amount of Rs 62.72 crore in its accounts for the quarter ended June 30, 2019," LVB said.
In recent months, there have been several instances of under-reporting of bad loans by lenders, prompting regulatory action by the RBI.
In a circular on Thursday, Sebi noted that disclosures in respect of divergence and provisioning are in the nature of material events and hence necessitate immediate disclosure. Further, this information is also price sensitive, requiring prompt disclosure by a listed entity.
Accordingly, the regulator has decided that "listed banks shall make disclosures of divergences and provisioning beyond specified threshold, as mentioned in aforesaid RBI notifications, as soon as reasonably possible and not later than 24 hours upon receipt of the Reserve Bank's Final Risk Assessment Report (RAR), rather than waiting to publish them as part of annual financial statements".
This new framework will come into force with immediate effect, it said on Thursday.
The disclosures need to be made in case the banks' additional provisioning for non-performing assets (NPAs) assessed by the RBI exceeds 10 per cent of the reported profit before provisions and contingencies, and if the additional gross NPAs identified by the RBI exceed 15 per cent of the published incremental gross NPAs.
