Making the RAR report public was not wrong: YES Bank
The bank said it disclosed the RBI report on bad loans to keep information symmetry.
Days after the YES Bank was pulled up by RBI for making a ‘confidential’ report public, the bank has put up a strong defense and said that the NPA divergence information was in due compliance.
Yes Bank told in a regulatory filing to the NSE -"The bank in its analysis was of the view that the disclosure about divergence was a UPSI and required immediate dissemination to the Stock Exchanges to safeguard compliance with Sebi Regulations and the NSE & BSE circulars,"
The bank said it disclosed the RBI report to ensure information consistency.
"Immediately on receipt of the RAR report, to avoid any further speculation, misuse or leakage of the UPSI, it was decided to disseminate the information regarding "Divergence" to the stock exchanges, so as to ensure information parity, instead of withholding this information till finalization of the Annual Results," the bank further stated.
The bank "has not made any excessive profit or benefit by proclaiming the UPSI. Hence, we submit that the bank has not misrepresented the stock exchanges/ investors in terms of Regulation 4(1)(c) of Listing Regulations".
UPSI stands for Unpublished Price Sensitive Information.
YES Bank had earlier informed stock exchanges that the RBI had found nil divergence in the asset classification done by the bank during 2017-18.
But RBI has mentioned that ‘nil’ divergence is not an achievement to be shown and is only in order with the extant Income Recognition and Asset Classification norms.
The regulator also pointed out that its Risk Assessment Report (RAR) identified various other lapses and regulatory gaps in multiple areas of the bank's functioning and the disclosure of just one part of the RAR is viewed as a deliberate attempt to mislead the public.
However, the RBI’s harsh view of Yes Bank’s move has confused lenders on whether it is a good practice to disclose NPA divergence, even though regulatory guidelines make it compulsory to publish it in their notes to accounts.
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