February 12, 2018 / 12:18 PM / 10 months ago

UPDATE 1-India's BOI reports third-quarter loss as bad loan provisions spike

* Net loss 23.41 bln rupees vs 1.02 bln rupees profit yr ago

* Analysts had expected loss of 693.9 mln rupees

* Gross bad loans widened to 16.93 pct q/q (Adds details)

Feb 12 (Reuters) - State-run Bank of India Ltd reported a third-quarter net loss on Monday as the lender set aside higher provisions for bad loans.

India’s banking sector has seen bad loans surge in the last four years, with the 21 state lenders accounting for the bulk of 9.46 trillion rupees ($147 billion) in non-performing loans at the end of September.

Reserve Bank of India and the government have been pushing for banks to clean up their bad debts, saying the overhang was choking new lending in Asia’s third-largest economy.

The central bank has pushed about 40 of the biggest corporate loan defaulters into India’s new bankruptcy proceedings and said creditor banks must ensure at least 50 percent of bad loans with those firms were provisioned by March.

BOI said a central bank audit found additional non-performing loans of 140.57 billion rupees to what the bank had reported for the year to March 2017.

Out of this, 94.05 billion rupees is on account of letters of credit by other banks for which BOI is not required to make additional provisions. So far, the lender has already recovered 47.51 billion rupees from other banks’ letter of credits.

BOI reported a net loss of 23.41 billion rupees ($364 million) for the quarter ended Dec. 31, compared with a profit of 1.02 billion rupees a year ago. Analysts on average had expected the company to make a loss of 693.9 million rupees. (bit.ly/2somvGd)

Gross bad loans as a percentage of total loans stood at 16.93 percent at end-December, compared with 12.62 percent in the previous quarter. Provisions for bad loans jumped 72 percent to 43.73 billion rupees. ($1 = 64.3200 Indian rupees) (Reporting by Krishna V Kurup in Bengaluru; Editing by Susan Fenton)

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