Rana Kapoor now holds just 900 shares in Yes Bank; lender admits under-reporting Rs 2,300 cr NPAs in FY19

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Updated: November 19, 2019 10:17:34 PM

The bank earlier disclosed that it has proposals of USD 3 billion from a slew of investors, which includes a USD 1.2 billion binding offer made by a US-based family office.

It can be noted that under Ravneet Gill, Kapoor’s successor, the bank has been accelerating its NPA recognition and also reported its maiden loss in the March 2019 quarter.

Fifteen years after he co-founded Yes Bank, and a little over a year after his term as its chief executive was cut short by the RBI, Rana Kapoor has virtually sold off his entire holding in the private sector lender, according to a regulatory filing by the company on Tuesday. The city-headquartered bank also said in a separate filing that it had under-reported as much as Rs 2,299 crore of bad loans in the past fiscal, shaving off nearly 40 percent of its net income for the year.

Kapoor, who had earlier likened his holding in the bank to “diamonds” and vowed never to sell it, holds just 900 shares valued under Rs 58,000 at the Tuesday’s closing price, the bank said. The RBI had in August 2018 refused to clear his reappointment for a three-year term over a slew of concerns such as poor corporate governance, badly made loans, and after the bank was found to have under-reported bad assets by over Rs 10,000 crore for two consecutive fiscals. Kapoor was asked to leave the bank latest by January 31, 2019.

Incidentally, the disclosure about Kapoor and the entities related to him dumping shares also came on a day when the bank made another admission of concealing over Rs 2,299 crore of bad assets for the third successive year. Kapoor, Yes Capital and Morgan Credits sold 2.04 crore shares or 0.80 percent of holding in the open market on November 13-14, the bank informed the exchanges.

He is now left with only 900 shares, which are a microcosm of the overall capital base of the bank, the statement added. It can be noted that Reliance Nippon Asset Management, had held a large number of shares pledged by Kapoor, had in September had sold the entire lot, leading to his stake in the bank come down to 0.80 percent from a peak of over 13 percent. This selloff had led to a massive correction in the bank’s share price to as low as Rs 32, which was less than a 10th of the over Rs 400 in August 2018.

In what can only aggravate matters, the bank disclosed that the Reserve Bank’s audit has found more divergence, the typical regulator-speak for under-reporting, at Rs 2,299 crore for FY19, which has forced it to re-state its net profit for the year to a low Rs 1,084 crore, lower by 37 percent against what was declared earlier. As the quantum of dud assets did not get recognised, provisioning for the same was less and RBI inspectors had found a Rs 978-crore hole in provisions, due to which profit figures had to be redone, the bank said.

It can be noted that under Ravneet Gill, Kapoor’s successor, the bank has been accelerating its NPA recognition and also reported its maiden loss in the March 2019 quarter. “The bank management stands irrevocably committed to ensuring the highest standards of accounting and governance transparency. In the current financial year, the bank has made material policy and personnel changes to ensure fullest regulatory compliance,” the management said. It also said there will be a board meeting in the next 10 days to “finalise” capital raising plans announced earlier.

The bank earlier disclosed that it has proposals of USD 3 billion from a slew of investors, which includes a USD 1.2 billion binding offer made by a US-based family office. Yes Bank, which has had to contract its book in the September quarter due to scarcity of capital, has said it would ideally want to raise the money by December so that it could get to growing the book again. The bank scrip closed 2.66 percent down at Rs 64.15 on the BSE, as against a 0.46 percent gain on the benchmark.

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