Window Dressing of Balance Sheet

Banks Balance sheets and SBI's Correct Position

This referss to the News items SBI Net slumps99 % on bad loans, pensions and Ghost from the past Returns to Haunt SBI appeared in the ET, dated 18th May 2011.It has become a ritual in banks that when ever there is change of guard at the top, the first quarter reasults under the new person show very poor performance and the achievements of the former guard turns out to be false and unimpressive. Such announcements by the new incumbent only indicate that many things have been and can be hidden under the carpet and the Accountants, Auditors and the Regulators also do not provide correct information or vouch for the authenticity of the figures.Particularly, the bad loans shoot up and the profits decline sharply under the new guard. The first quarter results and the balancesheet figures cannot have too much of variance unless the balancesheet figures are falsely prepared.

Investors and other stake holders do not know the correct position and they go by the reports that appear every now and then in the papers and elsewhere. If the present position of SBI is true, then the earlier reports compiled by the Chartered Accountants and vetted by the Auditors and regulators are wrong , then the whole matter needs to be thoroughy probed. For change of sensitive figures frequently, the Accountants, Auditors and the regulators of banks owe an explanation to investors and all stakeholders. Window dressing of balancesheets is neither desirable nor permissible.


T.V. Gopalakrishnan

( edited version of this letter appeared in ET,23 May 2011)