Aggregate Losses of 21 PSU Banks

BE/RBI NOTE/09/2019

The Quarter ended December 31, 2018, saw a total loss of Rs. 11,605 crore of the Public Sector Banks.  The major contributions were from the following:

The relative figure for the quarter ended September 2018 of these 21 banks was Rs. 14,716 and out of these banks,   11 had posted a profit and the 21 banks had shown a combined loss of Rs. 18,097 during the third quarter of 2018.

1. The losses were 35% less year on year, led by SBI which showed a profit of Rs. 3,954 crore against a net loss of Rs. 2,416 crore in third quarter of FY 2018.
2. SBI reported that Lower slippages, lower overheads and write back of mark-to-market provisions due to softening of bond yields contributed for the recovery.
3. Operationally banks fared well with combined net interest income (NII) which increased by 11% y-o-y which showed a figure of Rs. 59,505 crore.
4. The pre-provisioning figure showed a mild reduction and stood at Rs. 36,515 crore on account of increased deposits which led to increased interest expenses.
5. BOI reported that setting up of Rs. 5000 crore towards provisions led to the increased loss and also they attributed the reason for the loss to deterioration in the value of underlying assets against 331 NPA accounts.
6. All six banks under the Prompt and Corrective action of RBI (PCA) have recorded a spine in NPA numbers.
7. PNB reported 35% increase in its NPA to Rs. 77,733 crore and the reason was attributed to the Nirav Modi-Mehul Choksi fraud.

RBI imposes a penalty:

• Reserve Bank of India, has imposed a penalty of Rs. 3.5 crore on three PSU Banks which included PNB and OBC for violation of various banking norms.
• Penalty is levied for non-compliance with various directions issued by RBI on
  1. Monitoring of end use of fund
  2. Exchange of information with other banks and
  3. Restructuring of accounts.