Tough times are not yet over for PSU banks. These banks are set to see higher provisioning before the end of the financial year. The Reserve Bank of India (RBI) has issued an order saying that the central bank's inspection findings, which were so far taken lightly, must henceforth be complied with immediately and the auditor must certify the compliance. CNBC-TV18’s Gopika Gopakumar reports.
RBI has come down heavily on banks for not complying with the regulators annual inspection report findings. In a notification released last year the RBI had told banks to take the inspection findings seriously and to comply with them immediately after receiving the report. Currently the regulator says, banks do not pay much heed to the inspection findings and therefore that distorts the financial position of most banks. The findings are mainly with regards to additional provision that banks have to make with regards to non-performing asset (NPA) or over assessment of income. Govt approves Rs 12,517 cr capital infusion in 10 PSU banks The regulator has now told banks that they must make appropriate accounting entries after receiving the annual inspection report and finalise the next quarter results or the full year results based on the changes recommended in the inspection report. The statutory auditor also must certify, if the bank has complied with the findings and made the appropriate changes. According to RBI sources, this could have a material impact on the profitability of most banks for FY13. Especially public sector banks will have substantial amount of provisioning to make before the full year is over. The message seems to be clear; if there is any non compliance on the part of banks, it will be taken seriously by the Reserve Bank.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
