Public Sector Bank Book Higher Profit And Lower NPA

SBI has restructured loan aggregating to Rs11885 crore in fourth quarter and thus saved provision by Rs.1188 crore roughly. In addition to it,  SBI has sold bad debts valued Rs.4510 crore to ARC in the last quarter and shortfall of Rs.2800 crore approx has been amortised for two years. Roughly Rs.600 crore has been accounted for in Profit account of the year 2014-15 and rest Rs.2200 crore approx has been postponed for next financial year 2015-16. Volume of write off of bad loans and sacrificing of principal and interest on big amount compromise settlements is still unknown.

For this purpose RBI changed the rule of provisions at the fag end of financial year to help so called strong banks like SBI to come out of crisis. SBI took advantage of this amendment and shortfall in sale proceeds has not been fully accounted for in the financial year 14-15.
This is obviously a case of legal manipulation of financials and postponing the crisis for next year so that current CMD may get safe and respectful exit and retirement from Bank and hopefully may elevated as RBI Dy Governor. It is not SBI but all so called strong banks have manipulated the financials in the same way.

I therefore make an appeal to financial experts to make a through analysis of financials of SBI to find out whether there is actually cash recovery and upgradation of bad account or simply fraud with investors, taxpayers, depositors and borrowers of the bank. I do not trust and do not accept the claim of SBI that they have arrested slippages by concerted recovery from bad borrowers. Rather It will be appropriate to say that volume of hidden NPA is many times more than what has been declared by banks.

It is desirable to point out here that ,for last three consecutive years 2010-11 to 2013-14 gross NPA of SBI continued to rise . All of a sudden this year SBI reduced Gross and Net NPA perhaps without proportionate actual cash recovery. I hope RBI and SEBI will make deep scrutiny of the financials of all PSBs so that investors are made aware of truth of banks they bank with. Here  It is to be noted that return on advances has gone up slightly from 8.47% in 13-14 to 8.64% in 14-15 whereas return on investment has come down from 8.00% in 13-14 to 7.49% in FY 14-15.

CMD of public sector banks may retire by inflating profit and sharing dividend with investors and may get award from Ministry of Finance in form of incentives. But sooner or the later when bomb of bad debts will explode , it is customers of bank, staff of bank, investors of banks who will have to bear the impact of loss to bank. RBI and GOI should stop unhealthy practice and try to make bankers bold enough to say spade a spade. Bad debts are hidden for some time . But during this period bad borrowers dispose off the assets and banks suffer loss. so that bad debts are recovered in time . It is necessary to recover the money from bad borrowers in tie and without loss of time. Otherwise banks will loss heavy money as they are going to loss from defaulting customers like King fishers, Zoom Developers, GTL etc.