Unending pain: On SBI’s Q3 loss

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.