200 large accounts under RBI scanner

​New Delhi: As part of its effort to contain rising non-performing assets (NPAs), the Reserve Bank of India (RBI) has started scrutiny of 200 large accounts to assess level of stress and provisioning done against them by respective banks.

RBI is examining as to whether banks have followed prudential norms in respect of these stressed assets, a senior public sector bank official said. It is also assessing classification, provisioning and debt recast in respect of those loans, the official added. This is a part of regular annual inspection of book of the banks that the central bank undertakes each year after the closure of the financial year, another official said. Some of the accounts include Videocon, Jindal Steel and Power, the official added.

This exercise comes at a time when gross NPAs in the banking system has risen to around Rs 10.3 lakh crore, or 11.2 per cent of advances, compared to Rs 8 lakh crore, or 9.5 per cent of total loan, as on March 31, 2017. Following the annual inspection of the last year, many lenders, including Axis Bank, Bank of India and Yes Bank, were caught for under-reporting of NPAs.

The lenders started reporting divergences since June last year for having under-reported NPAs in FY16. This was followed by a second round of disclosures, starting October, of under-reporting in FY17 by a few lenders. In most cases, this led to a shooting up of NPAs and an ensuing jump in provisions against dud assets. This eroded their bottom lines and led to a sell-off in the stock causing erosion of wealth for investors.