RBI finds Yes Bank under-reported bad loans of Rs 3,277 cr in FY19, lender's gross NPA may rise by 41.5%

Private sector Yes Bank said that the Reserve Bank identified under-reporting of gross bad loans to the tune of Rs 3,277 crore during the financial year 2018-19. As a result, the private lender’s gross non-performing assets (NPAs) may go up by 41.5 percent. Yes Bank said in a communication with the exchanges,  it had reported gross NPAs of Rs 7,883 crore in FY19, but the RBI, during its inspection, identified bad loans amounting to Rs 11,160 crore . [caption id=“attachment_5595711” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Following the rise in the NPAs, provisions for bad loans for FY19 increased to Rs 978 crore, said the report adding the net profit for FY19 declined to Rs 1,084 crore from Rs 1,720 crore reported while finalising the results. Of the Rs 3,277 crore bad loans, Rs 1,259 crore has already been classified as non-performing as on 30 September and Rs 2,018 crore is the amount of incremental bad loans,  the bank said. “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 the regulatory filing. Meanwhile,  Yes Bank’s co-founder Rana Kapoor virtually sold off his entire holding in the private sector lender fifteen years after he co-founded the bank, reported PTI. Kapoor, who had earlier likened his holding in the bank to “diamonds” and vowed never to sell it, holds just 900 shares valued under Rs 58,000 at the Tuesday’s closing price, the bank said.

The RBI had in August 2018 refused to clear his reappointment for a three-year term over a slew of concerns such as poor corporate governance, badly made loans, and after the bank was found to have under-reported bad assets by over Rs 10,000 crore for two consecutive fiscals. Kapoor was asked to leave the bank latest by 31 January 2019. Kapoor, Yes Capital and Morgan Credits sold 2.04 crore shares or 0.80 percent of holding in the open market on 13-14 November, the bank informed the exchanges. He is now left with only 900 shares, which are a microcosm of the overall capital base of the bank, the statement added. Early this month, Yes Bank’s auditor reportedly demanded a fresh audit into the allegations of irregularities raised by a whistleblower against the bank and its founder Rana Kapoor. The bank’s statutory auditor BSR & Co found that the special audit done by JLN US & Co is inconclusive. This year, Yes Bank’s board had ordered a special audit after a whistleblower, in September 2018, raised complaints of irregularities in the operations of the lender, potential conflict of interests in relation to Kapoor and incorrect classification of NPAs.