Yes Bank founder Rana Kapoor, promoter entities now hold merely 900 shares in private sector lender; RBI finds bank under-reported bad loans

  • Yes Bank's founder Rana Kapoor and promoter entities YES Capital and Morgan Credits have sold their remaining 0.8 percent stake in private sector lender

  • On Tuesday, Yes Bank said the RBI had found that it has under-reported bad loans by Rs 3,277 crore in the year ended 31 March

  • RBI norms stipulate that banks are required to disclose any divergence of more than 15 percent to investors within a day of receipt of RBI's report

Private sector lender Yes Bank's promoter entities now hold merely 900 shares in the company. 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.

Fifteen years after he co-founded Yes Bank, and a little over a year after his term as its chief executive was cut short by the Reserve Bank of India (RBI), Rana Kapoor has virtually sold off his entire holding in the private sector lender, according to a regulatory filing by the company on Tuesday.

Incidentally, the disclosure about Kapoor and the entities related to him dumping shares also came on a day when the bank made another admission of concealing over Rs 2,299 crore of bad assets for the third successive year, a PTI report said.

The city-headquartered bank also said in a separate filing that it had under-reported as much as Rs 2,299 crore of bad loans in the past fiscal, shaving off nearly 40 percent of
its net income for the year.

Kapoor, promoter entities sell remaining 0.8% stake

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.

He is now left with only 900 shares, which are a microcosm of the overall capital base of the bank.

Kapoor and promoter entities YES Capital and Morgan Credits have sold their remaining 0.8 percent stake in private sector lender, which saw shares falling over 2 percent on the bourses.

"The promoters sold 2.04 crore shares in the open market during 13-14 November and now hold a token of 900 shares in Yes Bank," the lender said in a filing to the Bombay Stock Exchange. On Tuesday, shares of YES Bank fell after the company said its promoters sold stake in the company last week. The shares of the lender closed 2.66 percent lower at Rs 64.15 on BSE.

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.

Bank under-reports loans

On Tuesday, the private sector lender said the Reserve Bank of India had found that it has under-reported bad loans by Rs 3,277 crore in the year ended 31 March, according to a report in Mint. Of this, 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, Yes Bank said.

The Reserve Bank of India (RBI) had assessed gross NPAs of Rs 11,159 crore, of which the bank disclosed NPAs of Rs 7,882 crore, resulting in a divergence of 41 percent. The divergence in net NPAs stood at Rs 2,299 crore, which was 51 percent of the net NPAs reported by the bank.

As the quantum of dud assets did not get recognised, provisioning for the same was less and RBI inspectors had found a Rs 978-crore hole in provisions, due to which profit figures had to be redone, the bank said.

RBI norms stipulate that banks are required to disclose any divergence of more than 15 percent to investors within a day of receipt of RBI’s report.

“In the current financial year, the bank has made material policy and personnel changes to ensure fullest regulatory compliance,” Yes Bank said in the notification.

Under Ravneet Gill, Kapoor's successor, the bank has been accelerating its NPA recognition and also reported its maiden loss in the March 2019 quarter.

"The bank management stands irrevocably committed to ensuring the highest standards of accounting and governance transparency. In the current financial year, the bank has made
material policy and personnel changes to ensure fullest regulatory compliance," the management said

It also said there will be a board meeting in the next 10 days to "finalise" capital raising plans announced earlier.

The bank earlier disclosed that it has proposals of $3 billion from a slew of investors, which includes a $1.2 billion binding offer made by a US-based family office.

Yes Bank, which has had to contract its book in the September quarter due to scarcity of capital, has said it would ideally want to raise the money by December so that it could get to growing the book again.

Last month, the bank said it had received a binding investment offer worth $1.2 billion from a North American investor. The bank’s CEO Ravneet Gill had said that the bank had offers of more than $3 billion on the table. However, the lender is yet to take a call on fundraising.

The bank also reported divergence in provisioning at Rs 978 crore as on March 2019. Of this, provisions worth Rs 346 crore were made up to September 30, while additional provisioning requirement stands at 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.

Stake sold earlier

In September, Yes Bank along with co-founder Rana Kapoor have sold a combined 2.75 percent stake in the lender through the open market. Yes Capital (India) Pvt Ltd, Morgan Credits Pvt Ltd and Rana Kapoor have sold a combined 2.75 percent in YES Bank through the open market process, Morgan Credits said in a regulatory filing, according to a PTI report.

The combined entities held 9.64 percent holding in the bank then stood at 6.89 percent.

Reliance Nippon Asset Management, had held a large number of shares pledged by Kapoor, had in September had sold the entire lot, leading to his stake in the bank come down to 0.80 percent from a peak of over 13 percent. This selloff had led to a massive correction in the bank's share price to as low as Rs 32, which was less than a tenth of the over Rs 400 in August 2018.

Ace investor Rakesh Jhunjhunwala on 4 November, bought 1.30 crore shares or 0.51 percent stake in YES Bank. Jhunjhunwala picked up shares at Rs 67.10 per share, putting the deal value at around Rs 86.89 crore.

--With agency inputs

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Updated Date: Nov 20, 2019 09:15:34 IST