The outgoing Reserve Bank deputy governor, Shyamala Gopinath, has defended higher provisionings that SBI made in the Q4 of FY11 which saw its net plunging 99 percent, saying it does not call for a change in bank's accounting and reporting standards and that RBI can only ensure that a bank makes all the mandated provisions.
"The accounting or reporting standards of banks cannot change. How can they? If at all there is an issue, it is about the rise in NPAs, and not in other provisions, which SBI made. The Reserve Bank can only ensure that a bank makes all the mandated provisions for all the heads we ask for," Gopinanth, who is on the board of SBI, told PTI in her last interview as the deputy governor here yesterday.
"If a bank chooses to make a one-time provision, it is their choice and there's nothing wrong with it. The provisions towards gratuity, pensions and other annuities that SBI made in Q4 could have been staggered," Gopinath said, adding that the directors have no way to know the individual slippages.
These comments are contrary to those of her colleague, KC Chakrabarty. Recently he had gone public about disconcerting trend of state-run banks reporting poor numbers whenever a new chairman comes in.
"See our banks, I see when the chairman retires the profit goes down. Books should not be as per the minds of the chairman, but reporting should be as per books," he had said.
"The point is that irrespective of the fact who is the chairman, those provisions are to be made one quarter or other. So it is not about typically flouting norms, but about timing the provisioning," Gopinath argued.
She further said, "SBI's Rs 500-crore teaser loan provision was one-time and was mandated, but the rest all, barring those for new NPAs, could have been staggered. If at all previous chairman OP Bhatt had remained in office, he too would have made these provisions."
SBI stock price
On November 27, 2015, State Bank of India closed at Rs 249.55, up Rs 6.80, or 2.80 percent. The 52-week high of the share was Rs 335.90 and the 52-week low was Rs 220.60.
The company's trailing 12-month (TTM) EPS was at Rs 18.32 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 13.62. The latest book value of the company is Rs 165.49 per share. At current value, the price-to-book value of the company is 1.51.
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