RBI on Saturday released a press release causing major embarrassment to the private lender Yes Bank. In the statement RBI warned the lender for disclosing its divergence report in asset classification and provisioning. The central bank said that disclosure of the divergence report amounts to breach of the banking norms.
Earlier this week, Yes bank came out in public and issued a statement regarding the Nil divergence report by RBI.“The report observes NIL divergences in the bank’s asset classification and provisioning from the RBI norms,” the Yes Bank said.
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This breach in the “Confidentiality clause” prompted RBI and it rebuked the bank stating,”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 issuance of the Press Release has, therefore, been viewed seriously by the RBI and could entail further regulatory action/s,” RBI added.
The Central bank further alleged that the disclosure report was intended to mislead the public of its (Yes Bank) performance.
In 2015 RBI conducted Assest Quality Report of bank, intended to find those corporate loan accounts which have financial weakness but were still classified as standard accounts by the Yes Bank. And in that assessment report RBI found gross divergence.
As part of its supervisory process, the central bank assess the compliance report by the private lender with extant prudential norms on income recognition, asset classification and provisioning (IRACP). The divergence is the disparity between the report filed by private lender and the RBI’s inspection report.