SBI Reports Net Loss Of Rs 7,718 Cr, Highest Ever In Its History

Nation’s largest Public Sector bank – State Bank of India, has reported a net loss of Rs. 7,718 crore ($1.1 billion) for the last quarter of the financial year 2017 – 2018 ending on March 31. This the highest ever recorded loss for SBI and the second highest ever for any public sector, after Punjab National Bank (PNB) reported a net loss Rs 13,400 crore in the fourth-quarter of the same financial year after the two jewellery groups defrauded it of more than $ 2 million, as reported by NDTV.

The net loss of the last quarter of the financial year stood at Rs 7,718 crore, against the expert’s prediction of Rs. 1,285 crores compiled by Thomson Reuters. The Bank introduced new provisions for bad loans after a change in banking regulations by Reserve Bank of India (RBI). The RBI in February, introduced a revised framework for Resolution of Stressed Assets, withdrawing existing rules and asking banks to reclassify unimplemented schemes as bad loans.

According to Bloomberg quint, this impacted the level of non-performing assets (NPAs) at SBI as well, “Gross NPA ratio rose to 10.9 percent from 10.35 percent in December. Net NPA ratio rose to 5.73 percent from 5.61 percent in December. In absolute terms, gross NPAs rose to Rs 2.23 lakh crore from Rs 1.99 lakh crore at the end of December. Fresh slippages, which reflect new loans turning bad, rose to Rs 33,670 crore compared to Rs 25,836 crore in the previous quarter.”

The new provisions implemented by the RBI led to the increase in bad loans. Several banks have reported losses. “Gross bad loans as a percentage of total loans stood at 10.91 percent at the end of March quarter, compared with 6.90 percent during the same period a year ago, and 10.35 percent in the previous quarter” reports Economic times

The State Bank of India is expected to grow at a slower pace. “The industry has gone through a challenging phase and State Bank of India is no exception. However, I can confidently say that while last year was the year of disappointment, this will be the year of hope and next year will be the year of happiness,” said Rajnish Kumar, Chairman of State Bank of India, reports Economic Times.

The State Bank of India saw a merger with its associate banks in the year 2017 making it among the top 50 banks in the world. He further added, “Last three years have been very challenging, but in any organisation’s history this kind of situations do come but what matters is that we are a much stronger organisation than what we were two years ago.”

SBI holds more than a fifth of the Indian Banking assets and is the Country’s biggest money lender. The level of Non-performing assets (NPA) in Public sector Banks (PSB) have been surging at a higher rate. Public Sector banks wrote off Rs. 2.42 lakh crore worth of loans between 2014 – 2017, reports Economic Times.

Minister of State of Finance Shiv Pratap Shukla said in a written reply said that writing off the loan is a regular exercise and that the recovery will take place as per the existing mechanisms. He added that” Borrowers of such written off loans continue to be liable for repayment. Therefore, write-offs do not benefit borrowers. “

Offenders like Vijay Mallya and Nirav Modi each owe more than $1 billion to the Public sector banks SBI and PNB respectively.

The government has introduced Fugitive economic offender’s bill to “provide for measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts, thereby preserving the sanctity of the rule of law in India.”