Money & Banking

YES Bank, compliance officer pay ₹66 lakh to settle case with SEBI

Our Bureau Mumbai | Updated on September 26, 2019 Published on September 04, 2019

YES Bank and its compliance officer Shivanand Shettigar have paid ₹66.05 lakh to market regulator SEBI in a case related to alleged disclosure lapses to the exchanges on divergences and provisioning.

While YES Bank remitted ₹51.6 lakh as settlement amount, the compliance officer paid ₹14.45 lakh as settlement charges on August 27, according to two separate orders by SEBI.

Divergence report

The case relates to a regulatory filing by YES Bank on the BSE and NSE on February 13 regarding the report by the Reserve Bank of India on divergence in asset classification and provisioning for position as on March 31, 2018. YES Bank had reported ‘nil’ divergences in its asset classification and provisioning from the RBI norms. Then, on February 15, it made another filing, which said the report is confidential and the RBI had viewed the matter seriously.

However, under SEBI and RBI circulars, banks are required to disclose divergences in asset classification and provisioning if the additional provisioning requirements assessed by the central bank exceeded 15 per cent of the published net profit after tax, or the additional gross NPAs identified by the RBI exceeded 15 per cent of the published incremental gross NPAs for the reference period.

“Thus, disclosure of ‘nil’ divergence was not mandated by RBI and SEBI,” the regulator noted in its order, adding that YES Bank made a selective disclosure by highlighting ‘nil’ divergence, which had significant positive impact on the price movement and did not disclose other issues mentioned in the Risk Assessment Report (RAR).

“The approval was not taken from the Managing Director and CEO of YES Bank while deciding the materiality of events, or while making disclosure to stock exchanges,” SEBI further noted.

SEBI said it was alleged that the lender had made “selective disclosures of RAR, highlighted ‘nil’ divergence without proper authorisation, did not follow due procedure to disclose material information, and did not have systems in place to ensure that proper procedures are followed while disclosing material information under the LODR (Listing Obligations and Disclosure Requirements) Regulations.

SEBI also said the compliance officer was “responsible to ensure that the correct procedure is followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports”.

Pending adjudication proceedings, YES Bank and Shettigar filed settlement applications with SEBI, and offered to settle the case on payment of ₹51.6 lakh and ₹ 14.45 lakh, respectively.

SEBI’s High-Powered Advisory Committee recommended the case for settlement on the payment of the amount, which was approved by its panel of whole-time members.

The YES Bank scrip gained 1.11 per cent, and closed at ₹59.45 apiece on the BSE on Wednesday.

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Published on September 04, 2019
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