SBI Q4 profit up 23 percent, bad loans fall

State Bank of India has today announced annual financial report and announced reduction in Non Performing Assets and rise in net profit. I do not trust the correctness and genuineness of NPA data of the bank. Without manipulation and without concealment of bad debts, NPA ratio cannot come down. Government will have to inquire whether SBI has reduced NPA ratio by way of writing off of bad loans and by selling Bad accounts to ARC and treating the imaginary proceeds as Standard asset. Is there real recovery of money from defaulters equivalent to reduction in gross NPA shown by SBI in balance sheet? Government will have to verify critical accounts with exposure of rupees one crore and above to establish the correctness of financial result. Otherwise it will be equivalent to a fraudulent game played by bankers to conceal bad debts and spending good money to repay bad loans. If Government is able to peep into books of accounts of largest bank like SBI , the reality of all other public banks will be exposed and bitter truth of hidden bad debts will precipitate . And when truth is known, real action to recover the dues from defaulters may be undertaken by banks as well as by the government. If CBI is permitted to carry out investigation of each account of SBI , I am fully confident that NPA ratio will at least double than what have ben announced by SBI.NPA ratio may jump to four or five times also. It is simply false restructuring and selling of bad debts which has resulted in reduction of gross and net NPA of SBI. All banks manipulate the data of high value loans to inflate profit and to reduce NPA simply to please Ministry of Finance and RBI. Government of India is also least interested to expose the real volume of bad debts and neither interested to recover the money from defaulters. Banking scam is bigger than all scams which exposed in the past. All Bad debts are creation of UPA government and wrong policies of the then rulers. It is pity that even media men are incompetent to reveal the truth . Fact is that all public sector banks have concealed huge volume of bad assets and real volume of NPA is much more than what thy have announced in annual audited financials. Volume of NPA will continue to rise and a day will come it will explode . Ultimate loss will be borne by tax payers, bank staff and bank customers. There is continuous erosion in bank\'s capital and each bank is in need of infusion of capital from government. RBI has today told that share of LIC in Bank\'s capital is rising year after year and there is threat to LIC also in near future. But the question is who will stop such continuous fall in profit , erosion in capital and rise in bad debts. Are banks and legal machinery of the country equipped well to recover the money from bank loan defaulters? Are banks well equipped to ensure healthy lending in coming days and years? Or banks will continue to write off bad debts and sell bad debts to reduce Gross NPA ratio or make additional voluminous lending to HNI corporate to reduce ratio of Gross NPA. as hitherto done. If Government is somehow or the other ,able to recover money from all bad borrowers , there is no doubt to me that profit of each pubic bank will be at least five times of what they book now. Lacs of crores of good money deposited by people of India in various public banks is lost in bad loans, frauds , write offs, sacrifices in compromises and in money spent in recovery from bad borrowers. Otherwise , if the banks are allowed to accumulate bad loans , create new bad loans , write off bad loan and loss in fraud in the same fashion, I have no doubt that banks will continue to seek support from government or from LIC till they finally collapse and till LIC faces survival risk. If a business man is given a loan of Rs.one lac to do business, he may earn Rs.2000 to Rs.20000 per month depending upon the nature of his business. At least he has to earn Rs.2000 pm (2 percent per month ) so that he may pay Rs.1000 p.m.( one percent of capital per month) as interest to the bank and keep Rs.1000 p.m. (one percent of fund invested ) for him and his family. It is assumed that the business man has not invested his contribution as margin. SBI had a deposit base of Rs 13,94,408.50 crore as on 31st March 2014 . It means SBI has been enjoyed public fund of Rs.13,94,408 crore during the year 1914-15 . For the purpose of easy calculation , we assume that SBI had a deposit base of Rs.14 lac crore. As such SBI is supposed to earn minimum of Rs28000 crore per month. Or you may say that SBI should earn at least one percent of public fund per month as interest which a common businessman is supposed to pay as interest. In this case for SBI , Rs.14000 crore per month is equivalent to monthly interest and annual profit should be at least Rs168000 crore .As against it SBI has earned only Rs.13000 crore as net profit during the year 2014-15. Obviously SBI is not earning profit even equivalent to earning made by a common men on the capital of Rs.one lac. Similarly none of public bank is able to earn even one percent of public fund per month. Not to speak of per month , they are not earning even one percent per year of total fund they are having as deposit received from public. IN this way , we may say that though each bank is earning profit somehow or the other , some are also running in loss, but none of them are earning as they are supposed to . Profitability of each bank is at risk and getting eroded quarter after quarter. Even return of equity has sharply come down from more than one percent to half of percent.