State-owned Bank of India and Indian Overseas Bank have reported divergences in their bad loans for the fiscal ended March 2019, resulting into widening of net losses for the year.
Chennai-headquartered Indian Overseas Bank has reported a net non-performing asset (NPA) divergence of Rs 358 crore for 2018-19, due to which the divergence in provisioning came in at Rs 2,208 crore, according to a regulatory filing by the bank.
The bank has an adjusted loss of Rs 5,999.88 crore in the fiscal ended March 2019, higher than Rs 3,737.88 crore reported earlier, due to the divergence.
Banks have to report the divergence in asset classification and provisioning for NPAs as per the risk assessment Report of the RBI subject to certain conditions, which is the gap between the bad loans as declared by the lenders and that assessed by the regulator.
Bank of India on the other hand had a fall in its net NPA divergence by Rs 329 crore for 2018-19, because the NPAs reported by the bank were higher than that assessed by the RBI.
However, the lender's net loss for the year expanded to Rs 6,992.90 crore from Rs 5,546.90 crore reported by the bank due to divergence in provisioning requirement.
The bank's divergence in provisioning for the year was at Rs 1,446 crore, Bank of India said in the regulatory filing.
Earlier this month, market regulator Sebi had put in place tighter disclosure norms and 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.
Some banks, including Indian Bank, Union Bank of India and Lakshmi Vilas Bank, have already reported their NPA divergences for the last fiscal.
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.