What is kitchen sinking?

Kitchen sinking is when a business recognises all its troubles at one go. The new MD, CEO of microfinance lender Spandana Sphoorty, Shalabh Saxena opted for such an exercise in Q4FY22. It resulted in the MFI’s gross NPAs rising to 17.7 percent as of March end from 5.65 percent as of December-end and 3.1 percent a year ago. Kitchen sinking, however, does not mean the troubles have been dealt with. They might have simply been postponed. For example, even as Spandana’s GNPAs rose mutiple times in Q4, it posted a profit. Lower provisioning--which fell to a tenth from what was a year ago--enabled the MFI post a profit, said experts.