RBI may impose penalty on Yes Bank for info disclosure leading to stock soaring


By Anjana Das

New Delhi, Feb 17 (IANS): The Reserve Bank of India (RBI) may impose monetary penalty on Yes Bank for breaching the confidentiality norms of its communications exchange with the private bank which the central bank is said to be treating as a market-related information slip aimed at boosting the stock.

Sources said this calls for penalty as in other regulatory lapses of public sector banks (PSBs) or private banks, similar penalties have been imposed. "Why should Yes Bank not be handed down one as a future deterrent?" a source asked.

Following RBI's order, the bank had to disclose the RBI warning to it and its stock price went down 1.72 per cent to Rs 217.45 on February 15. Yes Bank's stock had soared 31 per cent on February 14 after the bank disclosed the RBI's observation in clearing it of divergence in NPA reporting.

Yes Bank made an exchange between it and the RBI public where it said that the central bank had not found any divergence in its non-performing asset recognition for 2017-18. Soon after its stock soared and it attracted the attention of the apex bank which in a first-of-its-kind criticism told Yes Bank that the risk assessment report was intended to a be a "confidential" document and that disclosures made by the lender was viewed by the regulator as a "deliberate attempt to mislead".

Shriram Subramanian, MD of InGovern, Institutional shareholder Activitism, told IANS that the central bank can impose a fine in this case which may not be a huge amount. In the last one month, RBI has fined several banks over this. This is not so grave a misdemeanour that RBI would cancel the banking licence. It will be just signalling that there is a violation, he said.

Recently RBI imposed a Rs 5 crore penalty on four PSBs -- a penalty of Rs 2 crore on Corporation Bank and Rs 1 crore each on State Bank of India, Bank of Baroda and Union Bank of India. The monetary penalty on the banks has been imposed for non-compliance with various directions issued by RBI on monitoring of end use of funds, exchange of information with other banks, classification and reporting of frauds, and on restructuring of accounts.

The clearance report from the RBI had come after two years of divergence in bad loan reporting as in FY16, after its first assessment, the RBI found Yes Bank's divergence of bad loans at Rs 4,176.70 crore -- much higher than the reported gross NPA of Rs 748.9 crore during the period. Again, in FY17, the central bank had found the private lender's divergence at Rs 6,355 crore, or three times the reported bad loans.

  

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Comment on this article

  • Ashok, Mangalore

    Sun, Feb 17 2019

    The Company Secretary Mr. Shettigar will be in a spot of bother with this development. He signed the notification addressed to Exchanges.

    Reply Report Abuse

  • mohan, Mangalore

    Sun, Feb 17 2019

    It is not RBI taking action ..it is Modi and jhoot who are giving fake economy firing to banks through RBI and present RBI governor is pro BJP and dosent know about economy dancing as per BJP....
    E very one knows present market condition is very bad they why everyone forced to give falls balance sheet to keep market in positive..

    Reply Report Abuse


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Title: RBI may impose penalty on Yes Bank for info disclosure leading to stock soaring



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