RBI noticed NIL divergences in bank asset classification and Provisioning, cleared charges against Yes Bank

Yes Bank Ltd announced that for the financial year ended March 2018, RBI had found no divergence in reporting the bad loan and provision numbers by the lender. Differences between the RBI’s inspection report and the lender’s report is commonly known as divergence in the market. The Private sector bank said it on Wednesday.

The report found no divergences in the provisioning and asset classification from the Central Bank norms (RBI), this news came when one of the youngest private lenders of the company mentioned that the bad loan ratio is higher for continues two financial years. The leadership of the bank also came into question at the time when the Reserve Bank of India [RBI] pointed out the discrepancies and the way it addressed its bad loan numbers.

In October 2015, the RBI had first conducted its asset quality review (AQR) to find about the corporate loan accounts which are financially weak, although this was classified as standard accounts on the lender’s book. While in the fiscal year 2016, after its first assessment review, the RBI noticed that Yes Bank’s difference of bad loans was at Rs. 4,176.70 crore which was much at a higher level than the gross which was mentioned. The NPA was of Rs. 748.9 crore during FY16.

For the year FY17, the RBI observed the private lender’s divergence at the rate of Rs. 6,355 crore, or thrice the reported bad loan price. For the same year FY17, the gross NPA’s of Yes Bank was at Rs. 2,018 crore which was lower than Rs. 8372.8 crore the estimation of the RBI. Further RBI held inspection over the private banks to know if they had followed with the regulatory norms on non-performing provisioning and asset classification.

The banking regulatory assesses compliance along with current prudential norms on income recognition; asset classification and provisioning (IRACP) where part of its supervisory processes. Depending upon the result of the IRACP process, the Yes Bank has received the FY18 year Risk Assessment report.

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