Finance Ministry displeased at state-run banks' poor quarterly performance
The Finance Ministry has made public its displeasure over the dip in the quarterly numbers of most of the state-run lenders, including State Bank of India.
"It is akin to asking someone who got bashed up on the road how he feels about it," Financial Services Secretary Rajiv Takru said on the sidelines of an event in Mumbai over the weekend when asked for his response to the drop in net profit of many public sector banks in the March quarter.
"I am not in love with it, no!" he added.
Driven by a higher provisioning, SBI's net or the March quarter plunged 18.5 per cent at Rs 3,299.22 crore against Rs 4,050.27 crore in year-ago period.
This was the first time in the last two years that the bank had shown a decline in the quarterly net profit.
SBI, which was among the last banks to come out with its numbers, joined a slew of its peers from the state-run lenders space in declaring lower numbers.
Among other banks, net profit of Kolkata-headquartered Allahabad Bank plummeted to Rs 126.15 crore against Rs 400.22 crore in the corresponding period a year ago.
Others in the league are United Bank of India (Rs 31.18 crore in March 2013 against Rs 149.29 crore year ago), Indian Overseas Bank (Rs 58.86 crore versus Rs 528.81 crore), Bank of India (Rs 756.57 crore versus Rs 952.73 crore) and Bank of Baroda (Rs 1,028.85 crore against Rs 1,518 crore).
However, Union Bank of India and Corporation Bank managed to show a marginal rise in profits during the period.
Mr Takru also reiterated his demand for hiking the penalty for errant banks found flouting rules from the current Rs 1 crore.
"Rs 1 crore is insignificant in current context. It has been discussed with the RBI. It requires a change in the rules. As soon as that limit is increased, one can look at heavier fines," he said.
On errant banks exposed recently by online news portal Cobrapost for allegedly flouting KYC and anti-money laundering norms, Mr Takru said it might take 7 to 10 days more as the apex bank is still working on the report.
On recapitalisation of banks, he said if banks adhere to the diktat to bring down the non-performing assets, then they may not require the capital.
A majority of the Rs 14,000 crore earmarked for recapitalisation of the public sector banks will be infused in the final quarter of the fiscal, he said, adding that a few of the bank may need the money early on.
