Banks told to disclose bad loan divergences within a day of RBI report

MUMBAI: The markets regulator has asked listed banks to disclose bad loan divergences with the Reserve Bank of India’s assessment within a day of receiving a final report from the banking regulator, tightening norms for asset quality disclosures.

“The listed banks shall make disclosures of divergences and provisioning beyond specified threshold not later than 24 hours upon receipt of the Reserve Bank’s Final Risk Assessment Report rather than waiting to publish them as part of annual financial statements,” the Securities and Exchange Board of India (Sebi) said on Thursday. Terming the information about divergences with RBI’S assessment material and price-sensitive, Sebi said it required prompt disclosures to shareholders.

In April, RBI mandated banks to disclose information about provisioning, if in its assessment the additional provisioning exceeded 10% of a bank’s profit before provision and contingencies. Banks were also directed to disclose information if additional non-performing assets (NPAS) were more than 15% of their reported NPAS. Such divergences in asset classification were being disclosed in notes to accounts in annual financial statements following the RBI directive.

A Sebi official said divergences are price-sensitive and need to be communicated to the exchanges at the earliest. “Any delay needs to be explained, and the material divergences ideally from the beginning should have been disclosed to the exchanges as soon as RBI inspection was over. The banks shouldn’t ideally have waited for RBI or Sebi directives,” the Sebi official said.