The Reserve Bank of India (RBI) may impose a 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 treated as a market-related information slip aimed at boosting the stock.
Sources said this calls for a 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 percent 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 were 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 the 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.