Accelerated provisioning led to CSB’s record loss: management

Bank takes additional Rs119 cr hit; Bad loans fall considerably

KOCHI: The accelerated provisioning to the tune of Rs118.69 crore has been instrumental in Catholic Syrian Bank (CSB) posting its biggest ever loss of Rs197.42 crore for the year 2018-19, according to  its management.

Earlier, the bank had posted a loss of Rs149.72 crore for the year 2015-16. The bank said its aggressive provisioning this time has helped it bring down its non-performing assets (NPA) considerably.

The financial year under review thus has witnessed its gross NPA fall from Rs764.13 core to Rs416.29 core year-on-year representing an improvement from 7.89 per cent to 4.87 per cent on that count. During the period, the net NPA decreased from Rs416.29 core to Rs240.68 core representing a contraction from 4.46 per cent to 2.27 per cent.

CSB has said in its note that the bank as a prudential measure decided to accelerate the provision for NPA.  “Though the provision requirements as on March 31, 2019 as per RBI provisioning norms is Rs169.61 crore, considering the uncertainties about the recoverability within a reasonable timeframe, as a prudential measure, bank has decided to change the Accounting Policy and accelerate the provisioning from the current financial year. Had the bank not accelerated the provisioning, provisions for NPA/write-off would have been lower by Rs92.11 core and loss before tax would have been lower by Rs92.11 crore,” the bank explained.

Likewise while the accelerated provisioning has had an impact to the tune of Rs14.84 crore in terms of provisioning pertaining to frauds, the bank also took a hit to the tune of Rs11.74 crore to its bottom line by not accounting for the appreciation in terms of security receipts held by the bank.

“As a cumulative effect of accelerated provisioning, the loss before tax is higher by Rs118.69 crore with consequential impact on investments, reserves and surplus and advances,” the bank said in its note.





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