RBI Found No Divergence In Provisioning, Asset Classification, Says Yes Bank

Yes Bank Ltd. said there has been no divergence in reporting of bad loan and provisioning numbers for the year ended March 2018 according to central bank’s risk assessment report.

This comes after one of India’s youngest private lenders reported higher bad loan ratios for two straight financial years. The bank’s leadership, too, came into question after the Reserve Bank of India pointed out discrepancies in the way it reported its bad loan numbers.

“The report observes nil divergences in the bank’s asset classification and provisioning from the RBI norms,” it said in an exchange filing.

The RBI conducted its first asset quality review in October 2015.

In FY16, after its first assessment, the RBI found Yes Bank’s divergence of bad loans at Rs 4,176.70 crore—much higher the reported gross NPA of Rs 748.9 crore during the period.

Again, in FY17, the central bank found the private lender’s divergence at Rs 6,355 crore, or three times the reported bad loan amount. Yes Bank reported gross NPAs at Rs 2,018 crore in FY17, lower than Rs 8,373.8 crore estimated by the RBI.

The RBI inspects banks to see if they have complied with regulatory norms on non-performing asset classification and provisioning.

The banks have to disclose divergences if the additional provisioning requirements assessed by the RBI exceed 15 percent of the net profits after tax and/or additional gross NPAs identified by the RBI exceed 15 percent of the incremental gross NPAs for the reference period, or both, as per the website of the central bank.

The discrepancy in reporting bad loan numbers also led to the RBI denying extension to Rana Kapoor as its chief executive officer and managing director. The private bank subsequently appointed Ravneet Singh Gill as the successor of Kapoor who stepped down at the end of January.