RBI finds Rs 519 crore provisioning divergence by Central Bank of India in FY20

In the absolute terms, gross NPAs of the bank stood at Rs 32,589.08 crore as on March 31 2020, but RBI calculated gross NPAs at Rs 32678.08 crore.

The Reserve Bank of India (RBI) has found divergence of Rs 519 crore in provisioning by Central Bank of India in the financial year 2020 (FY20), according to a regulatory disclosure made by the bank.

Accordingly, the adjusted net loss of the bank for the financial year 2020 has widened by Rs 519 crore to Rs 1,640 crore. The bank has also disclosed that RBI has found divergence of Rs 89 crore in the calculation of banks’ gross non-performing assets (NPAs) as on March 31, 2020. In the absolute terms, gross NPAs of the bank stood at Rs 32,589.08 crore as on March 31 2020, but RBI calculated gross NPAs at Rs 32678.08 crore.

The bank had declared more than required net NPAs during FY20. While the lender had reported net NPAs worth Rs 11,534.46 crore at the end of FY20, the RBI’s assessment showed net NPAs at Rs 11,104.46 crore, implying an extra declaration of net NPAs worth Rs 430 crore by the bank.

The bank is currently under prompt corrective action framework (PCA) of RBI. The banking regulator had placed Central Bank of India under PCA regime in June 2017 due to high net non-performing assets and negative return on assets. The regulator imposes many restrictions on banks under PCA framework, including on lending, management compensation and directors’ fees.

The lender had reported a 6% year-on-year (y-o-y) increase in its net profit at Rs 165 crore during the December quarter in the current fiscal (Q3FY21). Similarly, net interest income (NII) had grown 10% y-o-y at Rs 2,228 crore during Q3FY20.

While the gross NPA ratio of the bank remained at 16.3%, net NPA ratio remained at 4.73% as on December, 2020. On a proforma basis, the net NPAs of the bank remained at 6.58%. The Supreme Court had directed lenders not to declare any fresh NPAs after August 31, 2020. Therefore, banks had disclosed NPAs on a proforma basis to reflect true picture of the asset quality.