RBI to Impose Penalty on YES Bank for Disclosing the Information that would Undoubtedly lead to Rupturing of Stocks
RBI is in talks to impose a monetary penalty on YES Bank for rupturing the confidentiality norms of its communications exchange with the private bank which the Central Bank will be treating it as a market-related information slip aimed at boosting the stock.According to sources, this has eventually lead to penalties as in other regulatory lapses of public sector banks or the private banks, similar penalties have been foisted. A source asked that "Why should the YES Bank not be handed down on as a future discouragement?"
Following the RBI’s orders, the bank is on the verge of disclosing the RBI warning that lead to declining of the shares down from 1.72 percent to Rs 217.45 on February 15. YES, Bank’s stock had soared 31% on February 14 after the bank disclosed the RBI’s observation in clearing it of the divergence in NPA reporting.
YES, Bank has made an exchange between itself and the RBI public where it said that the Central Bank had not found any divergence in its non-performing property recognition for 2017-2018. Soon after its stock soared and grabbed the attention of Apex Bank which in a first-of-its-kind criticism told YES Bank that the risk assessment report was confined to a “Confidential” document and the disclosures made by the lender were viewed by the regulator as a “ Conscious attempt to mislead.”
The MD of InGovern, Shriram Subramanian who is an Institutional shareholder Activitism, told IANS that the Central Bank can foist a fine in this case which will as such may not be a considerable amount. In the previous month, RBI has fined several banks over this. This is not so grave a misdemeanor that RBI would cancel the banking license. It will be just signaling that there is a violation, he said.
Recently RBI has imposed a penalty of Rs 5 crore on four leading PSBs of India ranging from a penalty of Rs 2 crore on Corporation Bank to a Rs 1 crore penalty each on SBI, Union Bank of India and Bank of Baroda. The monetary penalty on the banks have been foisted for non-compliance with various directions issued by the RBI on monitoring the end use of funds, exchange of information with other banks classification, reporting of frauds, and on the account restructuring.
The clarification report from the RBI had come after two years of divergence in bad loan reporting as in FY 16, 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 desired tenure. Again, in FY17, the Central Bank found the private lender’s divergence at Rs 6,355 crore, or three times the reported the bad debts.