The largest lender of the country, State Bank of India has posted a drastic decline in its net profits for the fourth quarter of the last fiscal. The major reasons for the same have been cited as increase in provisioning for bad loans as well as cleaning up of its book of accounts.
With RBI raising provisioning requirements for teaser loans from 0.4% to 2%, SBI suffered a major hit with teaser loans being its triumph card since quite some time.
Also its gross non performing assets (NPAs) had increased in the last three years from about Rs 12,837 crore in March 2008 to Rs 25,326 crore as of March 2011.
RBI had indicated its dissatisfaction with the NPA level of the bank in its last inspection. It had downgraded about Rs 3,500 crore of assets and also asked for a provision worth Rs 650 crore to be made by the bank.
The apex bank had also raised questions on the factors like poor systems, lack of proper policies, lack of follow-up, lack of proper staff accountability amongst others.