RBI tells banks to disclose more information on NPAs

The Reserve bank of India has asked banks to reveal more information on their market operations, including data related to top 20 depositors, 20 largest borrowers, exposure to four largest non-performing accounts and special purpose vehicles sponsored by them, for the current fiscal.This, officials said, was to ensure the industry followed international best practices and to enhance transparency in banking operations. The disclosures are to be made part of the 'Notes to Accounts' in banks' balance sheets.

"The central bank has been taking several steps from time to time to enhance transparency in operations of banks by stipulating comprehensive disclosures in tune with international best practices," the RBI said in a communication to bank chief executives.

Besides giving information on the total deposits of the 20 largest depositors, banks would have to reveal the share of these deposits in the total deposit base. Banks would also have to provide an indication of distribution of advances, by revealing the share of 20 largest borrowers in total advances. They would also have to give details about exposure (credit plus investments) to 20 top customers, it said.

V Ramakrishna, chief executive officer, Indian Bank's Association, said, "We are focussing on improving governance and compliance to ensure that it is good for the industry".

According to new RBI norms banks have to give sector-wise break up of non-performing assets (NPAs). The four sectors are agriculture and allied sector; industry (micro & small, medium, and large), services and personal loans.

Banks have been providing information on advances and NPAs in presentation to analysts every quarter. Investors have been demanding information on the impact of the global economic slowdown on balance sheets, especially from the second half of 2008-09.

Roopa Kudva, managing director and chief executive officer, CRISIL said, banks' NPAs would continue to rise as the economic growth started to recover and were likely to peak around 4.50 per cent. "What we are seeing right now is not confined to small and medium enterprises, and it is not something unexpected," she said at a press meet today. In 2009, CRISIL had predicted that non-performing assets would rise to 5 per cent by March 2011.