29/05/2017 11:15 AM IST | Updated 29/05/2017 2:52 PM IST

India's Accounting Regulator Seeks Action Against Banks Misreporting Bad Loans

Bad loan estimates of certain banks and RBI don't match -- by a wide margin.

Mukesh Gupta / Reuters

Accounting regulator Institute of Chartered Accountants of India (ICAI) may spur disciplinary action against leading private banks who have reported bad loan estimates that are at odds with those of the Reserve Bank of India -- by a huge margin.

The Mint reported Institute of Chartered Accountants of India (ICAI) has sought clarification from RBI on the divergence of bad loan estimates, and plans to review the financial statements of Axis Bank, Yes Bank and ICICI Bank.

Last week, three large private sector banks -- ICICI, Yes Bank and Axis bank -- reported bad loan estimates that diverged from RBI's by thousands of crores, following a directive from the central bank to disclose instances of divergence if it exceeded 15%. There was a stark difference between what banks classified as bad loans and the mandatory "provisioning" against those loans as per RBI regulations.

For the 2016-2017 fiscal, Yes Bank's bad loans differed from RBI's by as much as Rs 4,176 crores, Axis Bank's bad loans varied from RBI's estimate by Rs 9,478 crore, and ICICI Bank's by 19.5 per cent or Rs5,105 crores.

S.R. Batliboi and Co. was the financial auditor of Axis Bank and Yes Bank in fiscal 2016, while ICICI Bank's auditor is BSR and Co.