After RBI's rap, mandatorily asking banks to disclose bad loan divergence of more than 15% (as compared to RBI's assessment) more skeletons are tumbling out. According to rating agency ICRA, more than 60% of the banks that have published their annual reports so far have reported a steep divergence from the RBI numbers. The total divergence of 15 banks stands at Rs 327.4 billion accounting for 14.3% of the gross bad loans for FY16.
Amongst them, Yes Bank showed the highest under-reporting of 85% in its gross bad loans for FY16. Jammu & Kashmir Bank, Bank of Maharashtra and ICICI Bank were the other banks that had a divergence of more than 15% in their reported gross bad loans. Although the level of divergence in the bad loans reported by several public-sector banks was low, the bigger concern is the continued slide in their asset quality. With many of them already having weak balance sheets, the rising slippages are expected to drain them further, thereby increasing dependence on the government for capital infusions to stay afloat.