Sebi Tightens NPA Disclosure Norms For Listed Banks

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Sebi Tightens NPA Disclosure Norms For Listed Banks
Yagnesh Kansara - 19 July 2019

Capital markets regulator Securities and Exchange Board of India (Sebi) has tightened the disclosure norms for the listed banks with respect to the divergence in provisioning of assets.

The changes made in the disclosure norms reads, "in line with the revised the Reserve Bank of India (RBI) requirements," the regulator said in a circular issued late Wednesday (July 17).

As per the circular, all listed banks will have to disclose to the stock exchanges (SEs) divergences in the asset classification and provisioning, if "the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period." Earlier, this threshold was 15%.

Besides, the disclosure will be mandatory in case "the additional gross NPAs identified by RBI exceed 15% of the published incremental gross NPAs for the reference period," Sebi said.

The Reserve Bank of India (RBI) in a notification in April 2019 had asked banks to disclose bad loan divergences in their financial statements if the additional provisioning exceeds 10% of profit before provision and contingencies.

Dealers said, the Sebi circular also played vital role in bank stocks dragging the benchmark indices down. The market was on a losing streak after it gained consecutively for previous three sessions.

The benchmark Nifty-50 was down 90.60 points (0.78%) at 11,596.60 while the sectoral Nifty Bank index was much weaker by 304.90 points (0.99%) at 30,430.60 points. The weakness in the bank stocks was so widespread that out of the 12 ingredient stocks of Nifty Bank, barring HDFC Bank and Kotak Bank, which were marginally in green, the remaining 10 stocks posted moderate to heavy losses. YES Bank was the top loser (down 12.70%).

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