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Bank of India reports RBI against its Auditors after making losses
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| Posted Date : 15-Jul-2015 , 08:27:30 am | Posted By CASANSAAR |
Irked by the stringent auditing of its earnings for the quarter ended March this year, state-run Bank of India (BoI) has written to the Reserve Bank of India (RBI), saying its auditors didn’t allow the loan to Essar Steel to be treated as standard, while most other lenders were allowed to.
Bank of India, which reported a loss for the March quarter, had classified the loan as non-performing, as a repayment was due for more than 90 days.
Sources say the borrower paid the dues to most lenders on the 92nd or 93rd day, which made these non-performing assets (NPAs). According to RBI norms, if the interest and/or principal is due for more than 90 days, a bank has to classify the loan as non-performing. Sub-standard assets, the first level of NPAs, attract 15 per cent provisioning, compared with 0.4 per cent for standard assets.
Most banks with exposure to Essar Steel have treated the account as standard, as the loan was serviced before the March earnings were finalised; the delay was only marginal.
However, BoI’s auditors wanted to go strictly by the books, saying the loan should be treated as non-performing. The bank’s exposure (fund and non-fund based) to the steel major stood at about Rs 250 crore. Together, about 20 banks and financial institutions have an exposure of Rs 50,000 crore towards Essar Steel.
“We are strictly going by the income recognition and asset classification norms. If someone is not going by the books, it is difficult for us to ignore. If we ignore it, the Reserve Bank of India will find it during the annual inspection and ask us why we have done so,” said Bharat Rattan of B Rattan & Associates, one of BoI’s central auditors.
The other auditors are Issac & Suresh, MM Nissim & Co, D Singh & Co, JK Kapur & Uberai, and Grover Lalla & Mehta.
For the quarter ended March, BoI had reported a net loss of Rs 56 crore, compared with a net profit of Rs 558 crore during the year-ago period. This was primarily due to doubling of provisions towards bad and doubtful assets, which stood at Rs 2,240 crore. Its gross NPAs doubled to Rs 22,193.24 crore in March this year from Rs 11,868.6 crore a year earlier. (Business Standard)
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Category : Auditing |
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| Comments |
| Posted By : CA.Subhash Chandra Podder |
29-Jul-2015, 07:00:00 |
| What did central statutory auditors wrong while conducting their audit ? |
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| Posted By : JAGDISH GUPTA |
16-Jul-2015, 12:28:43 |
| The Bank head functionaries are unsuccessfully trying to cover up their personal zeal to have the public shout for them. They have criminally offended bank's financials by misguiding public under false show of 558 crore profits at the real cost of further 11000 crores growing NPAs. They have become puppets in the hands of pawns for sheer desire to overshow. They are politically exploited sahukars. |
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| Posted By : JAGDISH GUPTA |
16-Jul-2015, 12:23:02 |
| OVerall asset quality of Bank of India is far poorer than reported.
Although no Bank for that matter, would be having clear and pure asset quality, smaller and mediocre banks are worst hit in rat-race for business and survival these days. Artificial show-windowing is unlawful and unethical for state run institutions in view of the truth that the profits or volumes do not go to anybody's home. |
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