Yes Bank share price drops 8% after RBI’s warning

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After the Risk assessment report by RBI, Yes Bank performed bad at the Stock Exchange and shares of the private lender plunged about 8%. The Central Bank warned the lender for regulatory actions for violating the banking norms by disclosing the “Confidential” NIL divergence report.

Earlier this week, Yes Bank reported that central bank has found NIL divergence in its Asset Classification and provisioning report.

The report observes NIL divergences in the bank’s asset classification and provisioning from the RBI norms,” the Yes Bank said in a statement.

After the disclosure of divergence report, the shares of Yes bank hiked about 30%, as it reported NIL divergence for the last fiscal.

Next day RBI too came public and said, the disclosure of divergence report amounts to violation of banking norms and Yes Bank has intentionally revealed them to mislead public.

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.”

In 2015 RBI conducted Assets 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.

In a report filed it FY 2016, Yes bank reported its gross NPA around 748.98 Crore, which as per the central bank was at 4,925.68 Crore, leading to a divergence in the report. This divergence further surged to 6,335 Crore and is said to be the primary reason behind RBI‘s decision for not allowing former CEO Rana Kapoor for a second term.

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