Do SBI's QE June 2012   Results Expose Past Misdeeds ?  What is In Store of Other PS Banks 

by

Danendra Jain dkjain49709@gmail.com

Result for the Quarter ended June 2012 announced by the largest state run bank called State Bank of India are  now out and the result is enough to point out in what direction SBI is moving and what is the hidden truth of other smaller banks coming under public sector. When the result of largest bank is deteriorating quarter after quarter, what will be the fate of other banks, one can imagine. Those who are highly positive minded, they can still imagine of good future. Result is given in brief below.

SBI's non-performing assets (NPA) rose sharply to 4.99 percent as on June 30, 2012 raising concerns over the bank's asset quality. The bank's gross non-performing assets were at 3.52 percent at the end of the first quarter of 2011-12 financial year.    At the end of the last financial year bank's non-performing assets was 4.44 percent.

Increase in non-performing loans led to a sharp drop in the company's share price. Share price of SBI slumped by 4.03 percent to Rs.1, 892.45 at the Bombay Stock Exchange (BSE) after the announcement of the first quarter financial results.

For me at least, result announced by SBI is not astonishing. Person like O P Bhatt and CEOs of other big banks enjoyed a lot during their tenure as Bank head and befooled the regulating agencies. After their retirement from their respective banks only, the bitter truth is slowly coming out on the surface. Similar type growth in bad assets is reported by other top banks which were considered as leading banks in the corridor of MOF and RBI when their CEO were preaching sermons to others and offering costly gifts on all inaugural functions.

Gross NPA of SBI has reached the level of 5% and very soon it will touch the level of 10% and more and there is no doubt to me that other banks will also follow the suit as soon as they fully expose the hidden bad assets.

It is shocking that the reason for rise in NPA given by chief of the bank is adverse monsoon and global recession. Bad monsoon likely to be this year or global recession likely to affect economy this year cannot affect the repayment of loans given to SME sector five to ten years ago. As a matter of fact,  all hidden NPA is slowly coming out and in any case none of existing bad asset is due to bad monsoon or draught or due to global recession.

In the past CEO of all state run banks cheated with MOF, RBI, Investors and the customers by concealing bad assets, by making inadequate provision for bad assets  by  reducing provisions on even terminal benefits like pension and gratuity and finally  by inflating profits and distributing dividends to Government of India and investors .Fraud and manipulation are deep rooted in officials seated  on top post and concocting false story of progress and development is not unusual in India.

Even Government of India talking of fiscal crisis does not hesitate in allowing large scale waiver of loan, subsidy to rich corporate and now free mobiles to attract voters in the fold of Congress party.