Shares of Bank of India slumped as much as 8 per cent to Rs.83.2 on Thursday after India's third biggest state-run lender reported a loss of Rs. 1,506 crore for the December quarter because of doubling of provisions for bad loans.
Bank of India had reported a net profit of Rs. 173 crore in the year-ago quarter.
Bank of India's provisions for bad loans more than doubled to Rs. 3,604 crore in the December quarter, against Rs. 1,584 crore in the year-earlier period.
Analysts have attributed the sharp rise in provisions in the December to the Reserve Bank's order asking lenders to treat some loans to stressed lenders as non-performing even if they have not defaulted yet.
The RBI's directions followed Governor Raghuram Rajan's call for clean-up of bank balance sheets by March 2017. The banks have been asked to make required provisions during the third and fourth quarters of this fiscal year ending in March.
Gross non-performing loans at Bank of India soared to Rs.36,519 crore against Rs. 29,894 crore sequentially. As a percentage of total advances its non-performing loans stood at 9.18 per cent against 7.55 per cent in the September quarter.
Its net non-performing loans, which is bad loans without provisions, stood at 5.25 per cent of total advances, compared to 4.31 per cent sequentially.
Bank of India shares closed 5.75 per cent lower at Rs.85.2 apiece compared to 3.32 per cent fall in the broader Nifty.
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