Custom Search

Saturday, February 27, 2016

Bank of India’s accounting change saves over Rs 1,000 crore

At a time when most public sector banks (PSBs) have taken a huge hit on their books, mainly because of provisioning for bad loans, Bank of India (BoI) appears to have escaped with a lesser knock in the December quarter. A close look at the bank's financials shows that a small change in the accounting practice — which is within the rules — helped it save over Rs 1,100 crore in the third quarter.

The government-owned bank posted a loss of Rs 1,505 crore in the third quarter of this fiscal as its provisions to cover bad loans more than doubled to Rs 3,603 crore. However, the bank would have run up another Rs 1,170 crore losses had it followed the conservative practice of setting aside 60 per cent as provisions for doubtful loans — loans that are overdue for over one year to three years, also known as D2 category.

In the third quarter, the bank reverted to RBI's prescribed formula of 40 per cent provisioning, which reduced the provisioning by Rs 1,789 crore, and helped it trim losses by up to Rs 1,170.25 crore, BoI said in a filing with the BSE.

Speaking to ET, Melwyn Rego, MD of Bank of India, said that the bank thought it appropriate to follow the RBI's prescribed norms on provisioning since banks have to anyway make proactive provisioning as per the Asset Quality Review undertaken by the regulator.

"The bank is working on a three-pronged strategy — focus on reducing NPAs, increasing low-cost deposits, and rebalancing the loan in favour of retail loans," he said.

This is the second time BoI has changed its accounting procedure without violating RBI norms.



Source : Economic Times

1 comments:

KA P said...

Find Q1 2016-17 result of bank of India in
Latest Bank Updates

Post a Comment

Popular Posts

 
Desi Google | A2Z Famous Quotes | What's Cooking America | Joke Site