With a slew of banks admitting to under-reporting their NPAs after a regulatory diktat, the Reserve Bank of India clarified it had not changed any rules and attributed the ‘divergences’ to the wrong application of the rules by the banks.
“We’ve assessed banks’ classification based on the rules they are today and we’ve found that in some cases, they have not applied those rules correctly,” Deputy Governor N.S. Vishwanathan told reporters.
“I want to make it very clear that there is no change in the goalposts’ the rules are as they are,” Mr. Vishwanathan added.
He said the divergences used to happen earlier as well based on inspection of banks’ books by the central bank, but what has changed the narrative now is the mandatory disclosure of the divergences.
“What has changed is the transparency we’ve brought in the form of disclosures in the divergences when they are more than a certain percentage,” he said.
The lenders started reporting divergences since this June for having under-reported NPAs in FY16. This was followed by a second round of disclosures starting October of underreporting in FY17 by a few lenders.
