Mumbai : Private sector lender Yes Bank’s shares tumbled nearly a third on Friday, wiping around Rs 22,374 crore ($3.1 billion) off its market value, after the Reserve Bank of India (RBI) reduced charismatic CEO Rana Kapoor’s term, creating uncertainty about its outlook. The RBI said late on Wednesday Kapoor can serve as the lender’s chief executive only till January 31, 2019, after shareholders voted in June to extend his term for three years, pending its approval.
According to market insiders, exemplifies the RBI’s increasingly assertive approach in tackling the bad debt problem plaguing India’s banking sector. Yes Bank was the worst performer in the Sensex pack, losing a whopping 28.71 per cent. Yes Bank’s bad loans spiked in October last year after a risk-based supervision exercise by the central bank forced the lender to account for Rs 6,355 crore more in the non-performing category. Kapoor had termed it a “temporary setback” and said remedial steps were underway.
“The RBI seems to be trying to put its foot down and establish an image of being an independent entity with the latest decision on Kapoor,” a Mumbai-based fund manager said. Before Friday’s trading, Yes Bank had a market value of about $10 billion (around Rs 72,202 crore). At least two brokerages downgraded the stock, citing uncertainty and doubts in investors’ minds about the bank’s future. Nomura analysts said a need to raise growth capital in troubled times, investor doubts about asset quality and the RBI’s concerns for Kapoor continuing in his position could weigh on the stock. The research firm downgraded the stock to “neutral” from “buy”, reducing its target price to Rs 345. Yes Bank said its board will meet on Sept. 25 to decide on a course of action.
Some analysts said even though Kapoor won’t be CEO from February next year, his influence on the bank will not disappear. He owned a direct 4.3 percent equity stake in the bank, as of end-June.
Bank pays Rs 38 cr fine over GST violations
Mumbai: Yes Bank has paid Rs 38 crore in fines to the GST department for alleged violations in domestic remittances, officials said Friday. Sources, however, said the money has been paid “in protest” and the lender believes that it has not violated any norms. Many peers have received similar demands and the “in protest” protest payment will be taken to its logical end, the officials added. The issue relates to remittances by migrants from urban pockets to their homes in rural areas. The tax department feels the bank has violated norms and under-paid the tax, while the bank feels the opposite. Over Rs 32 crore has been paid to the GST department, while Rs 6 crore has been paid in service tax which has been replaced by GST from July 2017. Sources also claimed that there was no formal demand or even a showcause notice to the bank and the payment was made on the basis of the demand made during “bilateral meetings” with the tax authorities.
