RBI finds Yes Bank under-reported bad loans by ₹3,277 crore in FY19

Mumbai: Private sector lender Yes Bank on Tuesday said the Reserve Bank of India has found that it has under-reported bad loans by ₹3,277 crore in the year ended 31 March.

Of this, ₹1,259 crore has already been classified as non-performing as on 30 September and ₹2,018 crore is the amount of incremental bad loans, Yes Bank said.

Divergence in bad loans and provisions arise when the bank’s and RBI’s assessments differ.

The bank also said the divergence in provisions was ₹978 crore as on 31 March 2019 and, since some of it has been provided for by September end, the incremental provisions are to the tune of ₹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 ₹2,100 crore of ‘Contingency Provision’ on exposures which were fully ‘Standard’ as on 31 March, 2019,” the bank said in a regulatory filing.

Yes 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.

According to recent guidelines by the Securities and Exchange Board of India, banks are now required to disclose divergence in the asset classification and provisioning immediately upon receipt of RBI’s final Risk Assessment Report (RAR).

Lenders including Indian Bank, Union Bank of India, Bank of India, Indian Overseas Bank, Central Bank of India and Lakshmi Vilas Bank have already reported their bad loan divergences for the last fiscal year.

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 exceed 15% of the published incremental gross NPAs.

Yes Bank reported a net loss of ₹600 crore for the three months to September, primarily owing to a one-time deferred-tax asset (DTA) adjustment of ₹709 crore. The bank had posted a net profit of ₹965 crore in the same period last year.

Its loss was higher than ₹402 crore estimated by a Bloomberg consensus estimate of 17 analysts. Even without DTA adjustment, the bank’s operating performance was weaker than the same period last year.

Yes Bank’s operating profit was also down 38% year-on-year (y-o-y) to ₹1,458 crore in the quarter under review.

Yes Bank recently said it has received a $1.2 billion (about ₹8,520 crore) binding offer for a stake purchase from a global investor.

In a separate development, Yes Bank founder Rana Kapoor virtually sold off his entire holding in the lender, according to a regulatory filing by the company on Tuesday.

Kapoor, who had earlier likened his holding in the bank to “diamonds” and vowed never to sell it, holds just 900 shares valued under ₹58,000 at Tuesday’s closing price, the bank said.

The RBI had in August 2018 refused to clear his 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 ₹10,000 crore for two consecutive years. Kapoor was asked to leave the bank latest 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.

With inputs from PTI