A closer reading of the Reserve Bank of India's (RBI) `Trend and Progress of Banking in India for 1999-2000' brings into sharp relief the fact that the story is not so nice with eight of the 19 recapitalised banks. Prior to adjustment for interest earned on recapitalisation bonds, these 19 banks posted a cumulative operating profit of Rs 7,224.87 crore and a net-profit of Rs 2,437 crore. Post-adjustment for interest earned on recapitalisation bonds, these figures change to Rs 5,427 crore and Rs 639.13 crore.

Predictably, Indian Bank, UCO Bank and United Bank are the worst performers, and posted losses of Rs 672.10 crore, Rs 177.94 crore and Rs 141.34 crore respectively. Other banks which tumbled down were IOB at Rs 83.69 crore, Central Bank (Rs 25.17 crore), Allahabad Bank (Rs 4.57 crore), PSB (Rs 4.30 crore) and BoI at Rs 1.43 crore.

Curiously, had the recapitalisation interest figure been taken into account while arriving at the spreads of these banks, the picture would have been dismal. The spread of state-run banks declined by 10 basis points to 2.70 per cent at the macro-level. Take away the SBI group, and the same stands reduced to 2.67 per cent (2.77 per cent). Again, the spreads of these eight banks show an improvement -- or are holding steady -- only because of the recapitalisation bond interest income. In any case, there are spreads well below the state-run bank group level spread of 2.67 per cent.

The bourses seem to be well aware of this dismal picture. The RBI report says that while the turnover of all bank shares on the National Stock Exchange increased by 16.3 per cent to Rs 30,982 crore, the share of the top five stood at 95.5 per cent. Share-prices of four listed recapitalised state-run banks fell: Bank of Baroda dipped by 0.97 per cent to Rs 46; BoI by 21.95 per cent to Rs 15.65; Corporation Bank by 2.18 per cent to Rs 76.40 per cent; and Dena Bank by 6.61 per cent to Rs 11.30.

OCB was an exception: Gained by 16.98 per cent to Rs 36.85.