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India's accounting body to review difference in bad loan estimates at 3 banks

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India's accounting body to review difference in bad loan estimates at 3 banks

The statutory body for India's chartered accountants has asked the Reserve Bank of India to provide information about the difference in bad-loan estimates by three private sector banks and the central bank, Mint reported May 29.

The Institute of Chartered Accountants of India wrote to the Reserve Bank of India asking to inspect the relevant documents submitted by some banks. The ICAI may consider a "further course of action," based on the central bank's response.

The ICAI's financial reporting review board will study the 2015-2016 financial statements of Axis Bank Ltd. and YES BANK Ltd. The board will also inspect ICICI Bank Ltd.'s financial statement, according to an official from the ICAI.

The move came after the three banks reported a divergence in their asset quality classifications and provisioning for fiscal 2015-2016 and what the central bank classified. The RBI had asked the banks to make a disclosure in their financial statements if the divergence exceeded 15%.

YES BANK reported that its bad loan classification at the end of March 2016 exceeded that of the RBI by 41.76 billion rupees. The central bank's classification of Axis Bank's bad loans was 94.78 billion rupees more than the bank's disclosure in fiscal 2016. In ICICI Bank's case, the divergence was 51.05 billion rupees more.

YES BANK had said in a May 12 disclosure that ongoing remedial actions drove the divergence between its reported nonperforming assets from that of the RBI's assessment.

As of May 26, US$1 was equivalent to 64.50 Indian rupees.