I do not trust the correctness and genuineness of NPA data of the bank. Without manipulation and without concealment of bad debts, NPA ratio cannot come down. Government will have to inquire whether SBI has reduced NPA ratio by way of writing off of bad loans and by selling Bad accounts to ARC and treating the imaginary proceeds as Standard asset.
Is there real recovery of money from defaulters equivalent to reduction in gross NPA shown by SBI in balance sheet?
Government will have to verify critical accounts with exposure of rupees one crore and above to establish the correctness of financial result. Otherwise it will be equivalent to a fraudulent game played by bankers to conceal bad debts and spending good money to repay bad loans.
If Government is able to peep into books of accounts of largest bank like SBI , the reality of all other public banks will be exposed and bitter truth of hidden bad debts will precipitate . And when truth is known, real action to recover the dues from defaulters may be undertaken by banks as well as by the government.
If CBI is permitted to carry out investigation of each account of SBI , I am fully confident that NPA ratio will at least double than what have ben announced by SBI.NPA ratio may jump to four or five times also. It is simply false restructuring and selling of bad debts which has resulted in reduction of gross and net NPA of SBI.
All banks manipulate the data of high value loans to inflate profit and to reduce NPA simply to please Ministry of Finance and RBI. Government of India is also least interested to expose the real volume of bad debts and neither interested to recover the money from defaulters. Banking scam is bigger than all scams which exposed in the past. All Bad debts are creation of UPA government and wrong policies of the then rulers. It is pity that even media men are incompetent to reveal the truth .
Fact is that all public sector banks have concealed huge volume of bad assets and real volume of NPA is much more than what thy have announced in annual audited financials. Volume of NPA will continue to rise and a day will come it will explode . Ultimate loss will be borne by tax payers, bank staff and bank customers.
There is continuous erosion in bank's capital and each bank is in need of infusion of capital from government. RBI has today told that share of LIC in Bank's capital is rising year after year and there is threat to LIC also in near future. But the question is who will stop such continuous fall in profit , erosion in capital and rise in bad debts.
Are banks and legal machinery of the country equipped well to recover the money from bank loan defaulters?
Are banks well equipped to ensure healthy lending in coming days and years?
Or banks will continue to write off bad debts and sell bad debts to reduce Gross NPA ratio or make additional voluminous lending to HNI corporate to reduce ratio of Gross NPA. as hitherto done.
If Government is somehow or the other ,able to recover money from all bad borrowers , there is no doubt to me that profit of each pubic bank will be at least five times of what they book now. Lacs of crores of good money deposited by people of India in various public banks is lost in bad loans, frauds , write offs, sacrifices in compromises and in money spent in recovery from bad borrowers.
Otherwise , if the banks are allowed to accumulate bad loans , create new bad loans , write off bad loan and loss in fraud in the same fashion, I have no doubt that banks will continue to seek support from government or from LIC till they finally collapse and till LIC faces survival risk.
If a business man is given a loan of Rs.one lac to do business, he may earn Rs.2000 to Rs.20000 per month depending upon the nature of his business. At least he has to earn Rs.2000 pm (2 percent per month ) so that he may pay Rs.1000 p.m.( one percent of capital per month) as interest to the bank and keep Rs.1000 p.m. (one percent of fund invested ) for him and his family. It is assumed that the business man has not invested his contribution as margin.
SBI had a deposit base of Rs 13,94,408.50 crore as on 31st March 2014 . It means SBI has been enjoyed public fund of Rs.13,94,408 crore during the year 1914-15 . For the purpose of easy calculation , we assume that SBI had a deposit base of Rs.14 lac crore. As such SBI is supposed to earn minimum of Rs28000 crore per month. Or you may say that SBI should earn at least one percent of public fund per month as interest which a common businessman is supposed to pay as interest.
In this case for SBI , Rs.14000 crore per month is equivalent to monthly interest and annual profit should be at least Rs168000 crore .As against it SBI has earned only Rs.13000 crore as net profit during the year 2014-15. Obviously SBI is not earning profit even equivalent to earning made by a common men on the capital of Rs.one lac. Similarly none of public bank is able to earn even one percent of public fund per month. Not to speak of per month , they are not earning even one percent per year of total fund they are having as deposit received from public.
IN this way , we may say that though each bank is earning profit somehow or the other , some are also running in loss, but none of them are earning as they are supposed to . Profitability of each bank is at risk and getting eroded quarter after quarter. Even return of equity has sharply come down from more than one percent to half of percent.
SBI Q4 net up 23% at Rs 3,742 cr-Business Standard
Asset quality improves as NPAs fall; profit beats estimates
SBI today reported 23 per cent jump in standalone net profit at Rs 3,742.02 crore in the fourth quarter ended March 2015 on improvement in its asset quality.
The country's largest bank had made a net profit of Rs 3,040.74 crore during the same quarter a year ago.
Total income of the bank also increased to Rs 48,616.41 crore in the last quarter of FY15, from Rs 42,443.27 crore in the same quarter a year ago, State Bank of India (SBI) said in a filing to the BSE.
The bank has recommended a dividend of 350 per cent or Rs 3.50 per share for the year ended March 2015.
During January-March quarter of 2014-15, the bank's asset quality improved as net non-performing assets (NPAs) or bad loans were trimmed to 2.12 per cent of net advances as against 2.57 per cent at the end of previous fiscal.
At the same time, gross NPAs also came down to 4.25 per cent of gross advances, from 4.95 per cent at the end of March 2014.
During the quarter, total provisioning and contingencies of the bank were high at Rs 6,592.91 crore from Rs 5,891.12 crore a year ago.
For the entire fiscal ended March 2015, SBI's net profit increased 20 per cent to Rs 13,101.57 crore as compared to Rs 10,891.17 crore for the year ended March 2014.
Total income on a standalone basis increased to Rs 1,74,972.96 crore from Rs 1,54,903.72 crore for the year ended March 2014.
SBI Group's consolidated net profit rose 20 per cent to Rs 16,994.30 crore during the fiscal under review as compared to Rs 14,173.77 crore in the previous fiscal.
The country's largest bank had made a net profit of Rs 3,040.74 crore during the same quarter a year ago.
Total income of the bank also increased to Rs 48,616.41 crore in the last quarter of FY15, from Rs 42,443.27 crore in the same quarter a year ago, State Bank of India (SBI) said in a filing to the BSE.
The bank has recommended a dividend of 350 per cent or Rs 3.50 per share for the year ended March 2015.
During January-March quarter of 2014-15, the bank's asset quality improved as net non-performing assets (NPAs) or bad loans were trimmed to 2.12 per cent of net advances as against 2.57 per cent at the end of previous fiscal.
At the same time, gross NPAs also came down to 4.25 per cent of gross advances, from 4.95 per cent at the end of March 2014.
During the quarter, total provisioning and contingencies of the bank were high at Rs 6,592.91 crore from Rs 5,891.12 crore a year ago.
For the entire fiscal ended March 2015, SBI's net profit increased 20 per cent to Rs 13,101.57 crore as compared to Rs 10,891.17 crore for the year ended March 2014.
Total income on a standalone basis increased to Rs 1,74,972.96 crore from Rs 1,54,903.72 crore for the year ended March 2014.
SBI Group's consolidated net profit rose 20 per cent to Rs 16,994.30 crore during the fiscal under review as compared to Rs 14,173.77 crore in the previous fiscal.
RBI Dy Guv warns LIC may feel pain of banking NPA woes: BS-Money ConTrol
LIC has been buying stakes in PSU banks through private placements to help then raise capital as few other investors were willing to put money given asset quality concerns.
RBI Deputy Governor SS Mundra has warned of a contagion risk because of the Life Insurance Corporation’s high exposure to public sector banks. In an interview to Business Standard, he said rising bad loans in state-owned banks will erode the value of LIC’s stake in them and hurt the insurer’s ability to serve its policy holders. And because of its large holdings, any distress sale could unsettle the market as a whole.
Mundra has been quoted in the interview as saying that LIC on an average holds 9.21 percent across public sector and private sector banks.
The RBI had flagged this concern in its financial stability report in December last year as well.
LIC has been buying stakes in PSU banks through private placements to help then raise capital as few other investors were willing to put money given asset quality concerns.
In March this year, LIC invested Rs 576 crore in Bank of India by picking up 2 crore shares through a preferential allotment.
According to a Financial Express report , LIC doubled its stakes in four PSU banks — United Bank , Punjab and Sind Bank, Central Bank of India and Bank of Maharashtra — in FY15 by investing almost Rs 1500 crore.
In January 2014, LIC had invested close to Rs 3000 crore in State Bank of India ’s Qualified Institutional Placement (QIP). Without LIC’s support, SBI would not have been able to raise the Rs 8000-odd crore it wanted to.
Experts have warned that over-reliance on LIC will make the government complacent in pushing for PSU bank reforms, which are critical to the banks’ ability to raise capital on their own.
According to estimates by broking firms and rating agencies, state-owned banks need anywhere between Rs 2-3 lakh crore of capital over the next 4 years for growth.
Mundhra’s warning comes barely a week after his boss and RBI Governor Raghruram Rajan cautioned that banks non-performing assets could rise further in the coming days.
Similarly dire predictions have been made by some of the rating agencies as well. CRISIL last week said it expected gross NPAs of the banking industry to touch Rs 4 lakh crore this fiscal. Moody’s mentioned the banking sector’s asset quality as a major hurdle to an upgrade in India’s sovereign rating.
The fourth quarter earnings of most public sector banks and even some private sector banks like ICICI reflected the pressure from increased NPAs.
“Not withstanding (the positive surprise on NPA levels) there is considerable pain still left in the economy,” Bank of Baroda ’s Managing Director and Chief Executive Officer Ranjan Dhawan told CNBC-TV18 post the bank’s fourth quarter earnings.
“Most of our major clients are still not out of the woods. They have serious liquidity issues,” he said.
The Economic Times today has reported that close to Rs 57,000 crore of restructured loans have turned bad at the end of the March quarter, compared to around Rs 30,000 crore in the year-ago period.
Restructuring of loans refers to original terms (such as interest rates and repayment schedule) being relaxed when borrowers have difficulty in repaying.
40 firms account for 50% of bank bad loans, House panel told -Business Line
The Centre has told the Parliamentary Standing Committee on Finance that 40 major companies in the country account for 50 per cent of the total non-performing assets (NPAs) or bad loans in various banks.
The Centre is also learnt to have told the panel that if the banks follow the guidelines of the Reserve Bank of India strictly, the amount of NPAs may rise.
The panel members have asked the government to submit the list of defaulters and the amount owed.
On Thursday, the panel started taking oral evidence of various departments on the issue. The representatives of the Finance Ministry (Department of Financial Services), Nabard and SIDBI appeared before it. “The meeting was inconclusive. We will meet these representatives again on the issue,” a member said.
Headed by Congress leader Veerappa Moily, the panel had selected NPAs as a subject last year.
It is likely to submit a report on the subject during the Monsoon session of Parliament.
The Opposition parties have been urging the Centre to take steps to recover liabilities of big companies and use that amount for welfare.
Meanwhile, the Standing Committee on Information Technology met representatives of BSNL, Bharti Airtel, Vodafone India and Idea Cellular Ltd on net neutrality and frequent call drops.
“We have got a number of complaints from the consumers. We wanted to hear the views of service providers as well. The process will continue,” a member in the panel said. All the three companies submitted their views on net neutrality.
An in-depth study is necessary on this new subject of net neutrality, said member of the Committee and CPM leader P Karunakaran, adding that “the main issue is that common people should get the benefits and it should not be at the will and pressure of private companies.”
Telecom Regulatory Authority of India, Telecom Ministry, private companies and other stakeholders will be consulted before taking a final call, he added.
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