The Reserve Bank of India (RBI) has come down heavily on private sector lender Yes Bank for making it public through a press release that the regulator’s inspection report found no divergence in bad loans or provisioning for the year 2017-18.
Earlier this week Yes Bank, citing RBI’s Risk Assessment Report (RAR), said the regulator did not find any divergences. Next day, the share price surged by 31%. “As the RAR report was marked “confidential,” it was expected that no part of the report and information contained therein be divulged except for the information in the form and manner of disclosure prescribed by regulations,” RBI told Yes Bank in a communication.
“Therefore, the press release breaches confidentiality and violates regulatory guidelines. Moreover, nil divergence is not an achievement to be published and is only compliance with the extant Income Recognition and Asset Classification norms,” the central bank said, adding the report also identifies several other lapses and regulatory breaches in various areas of the bank’s functioning and the disclosure of just one part of the RAR is viewed by RBI as a deliberate attempt to mislead the public.
“The issuance of the press release has, therefore, been viewed seriously by the RBI and could entail further regulatory action,” the central bank added.