Unending pain: On SBI’s Q3 loss
Context:
- For the first time in almost 19 years, the State Bank of India reported a quarterly loss of ₹2,416 crore for the three months ended December, compared with a net profit of ₹2,610 crore in the year-earlier period.
Reasons:
- The loss was the result of both a massive increase in provisions to account for bad loans and a substantial amount of mark-to-market losses on its holding of government bonds.
- Provisions for non-performing assets (NPAs) more than doubled to about ₹17,760 crore, from about ₹7,200 crore in the third quarter of 2016-17.
- Private sector lenders have also been found guilty of pushing troubled assets under the carpet until the RBI called their bluff.
- According to a joint study by Assocham and Crisil, gross NPAs in the banking system are estimated to increase to ₹9.5 lakh crore by March 2018, from ₹8 lakh crore a year earlier.
Steps taken:
- Recapitalization of public sector banks for reviving credit growth.
