New Delhi: Private sector lender Yes Bank said on Thursday that the Reserve Bank of India (RBI) has found that it has under-reported bad loans by Rs 3,277 crore in the year ended March 31. Of this Rs 3,277 crore, Rs 1,259 crore has already been classified as non-performing (NPA) as on 30 September and Rs 2,018 crore is the amount of incremental bad loans.
The bank said in the regulatory filing, "The Bank would like to clarify that the incremental Gross NPA of Rs 2,018 crores is across 4 accounts of which exposure of Rs 1,041 crores across 3 accounts was internally rated and disclosed as 'BB&Below' as on September 30, 2019."
For those who are not aware, divergence in bad loans and provisions arise when the bank’s and RBI’s assessments differ. Yes Bank said that the divergence in provisions was Rs 978 crore as on March 31, 2019, and, since some of it has been provided for by September end, the incremental provisions are to the tune of Rs 632 crore.
“The bank’s management stands irrevocably committed to ensuring the highest standards of accounting and governance transparency. This was also evidenced through the proactive measure of taking Rs 2,100 crore of ‘Contingency Provision’ on exposures which were fully ‘Standard’ as on 31 March, 2019," the bank said in a regulatory filing.
It may be noted that as per SEBI circular no CIR/CFD/CMDl/120/2019 dated October 31, 2019, banks are now required to disclose the divergence in the asset classification and provisioning immediately upon receipt of Reserve Bank of India (RBI's) final Risk Assessment Report (RAR).
Regarding this, Yes Bank received the Risk Assessment Report for FY2019. The bank said in its statement that the requisite disclosure was made in compliance with Regulation 30 of SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015.
The bank added that in the current financial year, it has made material policy and personnel changes to ensure fullest regulatory compliance. “The bank intends to convene a meeting of its board of directors by the end of this month to finalize its capital raise," it added.
Note that the disclosures need to be made in case banks’ additional provisioning for non-performing assets (NPAs) assessed by the RBI exceeds 10% of the reported profit before provisions and contingencies, and if the additional gross NPAs identified by the RBI is over 15% of the published incremental gross NPAs.
Yes Bank on Tuesday informed the exchanges that Rana Kapoor and promoter entities Yes Capital and Morgan Credits have sold their remaining 0.8 per cent stakes in the company.
It is worth mentioning that the bank reported a net loss of Rs 600 crore for the quarter ended September 30, primarily owing to a one-time deferred tax asset (DTA) adjustment of Rs 709 crore. The bank’s operating performance was weaker than the same period last year. Yes Bank recently said it has received a US$1.2 billion (about Rs 8,520 crore) binding offer for a stake purchase from a global investor.
Meanwhile, Yes Bank founder Rana Kapoor virtually sold off his entire holding in the lender, the lender informed in a regulatory filing on Tuesday. Kapoor, who had earlier compared his holding in the bank to “diamonds" and vowed never to sell it, now just holds just 900 shares valued under Rs 58,000 at Tuesday’s closing price, the bank said.
The RBI had in August 2018 refused to clear Kapoor's reappointment for a three-year term over concerns including poor corporate governance, bad loans, and after the bank was found to have under-reported bad assets by over Rs 10,000 crore for two consecutive years. Kapoor was asked to leave the bank by 31 January.
Kapoor, Yes Capital and Morgan Credits sold 20.4 million shares in the open market on 13-14 November, the bank told the exchanges. The bank also informed the exchanges that it has, pursuant to invocation of pledge of shares, acquired 949,930 equity shares having a nominal value of Rs 10 per share, constituting approximately 20.61 % of the post-issue paid-up share capital as at September 30, 2019, of a listed company, namely, Tulip Star Hotels Limited.