Public Sector Banks suffer Rs 87,000 cr loss in FY18

Source: The Hitavada      Date: 11 Jun 2018 08:31:46


 

NEW DELHI, 

Of the twenty one State-owned banks, only two banks, Indian Bank and Vijaya Bank, posted profits during 2017-18. Indian Bank posted the highest profit of Rs 1,258.99 crore and Vijaya Bank’s profit was Rs 727.02 crore in the fiscal

LOSSES of Public Sector Banks crossed a whopping Rs 87,300 crore in 2017-18 fiscal, topped by scam-tainted Punjab National Bank which took a hit of nearly Rs 12,283 crore.


Of the 21 State-owned banks, only two banks, Indian Bank and Vijaya Bank, posted profits during 2017-18. Indian Bank posted the highest profit of Rs 1,258.99 crore and Vijaya Bank’s profit was Rs 727.02 crore in the fiscal. So, the net loss posted by State-owned banks was about Rs 85,370 crore in 2017-18 as against a net profit of Rs 473.72 crore in the previous fiscal.


The 19 Government-run banks collectively posted a net loss of Rs 87,357 crore during the fiscal, according to the latest quarterly numbers posted by these lenders.
Punjab National Bank, which is reeling under more than Rs 14,000 crore scam allegedly perpetrated by Nirav Modi and associates, posted a net loss of Rs 12,282.82 crore last fiscal. In 2016-17, the Delhi-headquartered bank had posted a profit of Rs 1,324.8 crore.


PNB was followed by IDBI Bank, whose net loss widened to Rs 8,237.93 crore in the fiscal ended March 2018 from Rs 5,158.14 crore in the previous year. India’s largest bank State Bank of India too added hugely to the combined losses of PSBs. SBI’s net loss in 2017-18 stood at Rs 6,547.45 crore as against a net profit of Rs 10,484.1 crore in 2016-17. Indian banking sector is grappling with mounting Non-Performing Assets (NPAs) and host of scams and frauds.


The NPA in the banking sector stood at Rs 8.31 lakh crore as of December 2017.
Weak financials due to mounting bad loans have already pushed 11 banks, out of 21 state-owned banks, under the Prompt Corrective Action (PCA) framework of the Reserve Bank.


The recent tight prudential norms released by the RBI on February 12 have added to the NPA woes. Interim Finance Minister Piyush Goyal has announced setting up of a
committee to give recommendations in two weeks on formation of an Asset Reconstruction Company for faster resolution of stressed accounts. The committee under Sunil Mehta, non-executive chairman of PNB, will make recommendations in two weeks on setting up of an Asset Reconstruction Company or Asset Management Company for faster resolution of stressed accounts.


The Finance Minister said the committee will consider whether such an arrangement will be good for the banking system and, if any such suggestion is advisable, it will also consider the modalities by which such an ARC and/or and AMC should be set up.


Meanwhile, enthused by the successful resolution of Bhushan Steel, Nirav Modi fraud-hit Punjab National Bank (PNB) is hopeful of Rs 8,000 crore recovery from bad loans in the first quarter of the current fiscal.
The bank, with its focus on recovery of dues from defaulters, has managed to surpass the total amount recovered in the last fiscal in the first two months of this financial year, a senior PNB official told PTI.


“This is due to renewed focus on recovery by PSB banks including referral of many cases to NCLT under the bankruptcy code is forcing many of the defaulting companies to settle their NPAs. While PNB had recovered Rs 5617.55 crore in the whole of last year, the bank’s recovery stands at Rs 6,000 crore by first week of June,” the official said.


By the time, this quarter (April-June) ends, PNB expects to complete recovery of almost Rs 8,000 crore, the official said, adding that large corporates like Religare, Arcotech and Surya Alloys have recently settled bad loans worth Rs 350 crore in the last two months via the recovery camps setup by PNB.


It is to be noted that PNB posted loss of Rs 13,416.91 crore for the fourth quarter ended March, 2018, the biggest ever by any domestic lender.
The bank last month said it provided for Rs 7,178 crore, 50 per cent of the total amount of Rs 14,356 crore in the fourth quarter of 2017-18, with regards to the loss incurred on account of Nirav Modi fraud.


According to the bank, the remaining amount will be covered in the three quarters of the current fiscal year.
PNB further said it has paid Rs 6,586.11 crore to other banks to discharge its liabilities towards Letter of Undertakings (LoUs) and Foreign Letter of Credits (FLCs) issued fraudulently and in unauthorised manner to certain overseas branches of Indian banks through the misuse of SWIFT system of the bank, which was then not integrated with CBS (core banking solutions).


Modi and his associates in connivance with some officials of PNB defrauded the bank of over USD 2 billion dollar.
To focus on recovery, PNB has moved over 3,000 personnel from operations across the country into the stressed assets vertical, the official said. “The stressed assets vertical has started operating from June 1. Four General Managers from the Corporate office have been tasked with heading the recovery vertical as part of the bank’s management strategy to fast track recovery of NPAs,” the official said.


SBI to auction 12 bad accounts this month to recover over Rs 1325 cr: THE country’s largest lender SBI will conduct auction of 12 non-performing accounts (NPAs) later this month to recover dues of over Rs 1,325 crore. The e-auction of these accounts will take place on June 25, according to an SBI notice.


The NPA accounts that have been put under the hammer include Ankit Metal & Power Ltd (Rs 690.08 crore), Modern Steels Ltd (Rs 122.61 crore), Good Health Agrotech Pvt Ltd (Rs 109.14 crore), Amit Cottons Pvt Ltd (Rs 84.70 crore), and Ind-Swift Ltd (Rs 80.49 crore).