Yes Bank under-reported bad loans of ₹3,277 crore, finds RBI

Rana Kapoor and his companies exit almost fully from bank

Yes Bank reported a whopping ₹3,277 crore divergence of bad loans in the financial year 2018-19, following which its gross non-performing assets will increase by 41.5%.

In a communication to the exchanges, the lender said it had reported gross NPAs of ₹7,883 crore in FY19, but the RBI, during its inspection, identified NPAs worth ₹11,160 crore.

Hence, the divergence or under-reporting of gross NPAs was ₹3,277 crore. The divergence in net NPAs was ₹299 crore for 2018-19.

As a result of the increase in NPAs, provisions for bad loans for FY19 increased to ₹978 crore. Hence, net profit for FY19 fell to ₹1,084 crore from ₹1,720 crore reported while finalising the results.

The bank further informed the exchanges that out of the ₹3,277 crore, ₹1,259 crore had already been identified as NPAs till September 30.

The remaining ₹2,018 crore is across four accounts, of which exposure of ₹1,041 crore is across three accounts and was internally rated and disclosed as ‘BB & Below’ as on September 30.

Also, out of the additional provisioning requirement of ₹978 crore, the bank has made a provision of ₹346 crore till end September and ₹632 crore of more provisioning will be required.

Kapoor sells stake

A year ago, Rana Kapoor, the bank’s co-founder and former MD & CEO, said ‘Diamonds are forever’, indicating that he would never sell his stake in the company.

A year later, Mr. Kapoor and promoter entities, Yes Capital and Morgan Credits, are left with only 900 shares after they sold 0.8% stake on November 13 and 14, according to an exchange filing.

Morgan Credits and Yes Capital started selling stakes in September. On September 19, Morgan Credits Pvt. Ltd sold 2.3% shareholding in the bank for about ₹340 crore to prepay non-convertible debentures subscribed by various schemes of Anil Ambani’s Reliance Nippon Life Asset Management (RNAM) Company.

On September 26, Yes Capital sold 1.8% shareholding in the bank to prepay non-convertible debentures (NCDs) subscribed by various schemes of Franklin Templeton Asset Management.

Also in September, Reliance Nippon Life Asset Management invoked 3.92 % of its stake in Yes Bank.