Following the RBI directive on bad loans, Yes Bank reported a disclosure in divergence of Rs 4176.7 crore in gross non-performing assets as on March 2016, as per the annual report of the bank.
The divergence in net NPAs stood at Rs 3318.7 crore.
In March 2016, Yes Bank had reported a gross NPA figure at Rs 750 crore as against the RBI’s assessment of Rs 4,925.7 crore. In the same period, net NPAs declared by the bank stood at Rs 284.5 crore while the RBI assessment showed a substantially high number of Rs 3603.1 crore.
Explaining the RBI's assessment, Rana Kapoor, Yes Bank’s MD and CEO mentioned that the gross NPAs increased largely due to one single cement borrower (Jaiprakash Associates), the exposure to which stood at Rs 911 crore (88 percent of gross NPAs).”
In a statement Yes Bank said it expects this to be recovered in the near term and it has already made specific provision of Rs 227.9 crore towards the account.
"Therefore, the bank reiterates that there is no carry forward impact of the divergence observed by RBI in FY17-18," the statement added.
On April 18 this year, the RBI directed banks to make disclosures wherever additional gross NPAs identified by the RBI exceeded 15 percent of published incremental gross NPAs for the period by the bank.
The central bank also asked banks to make adequate provisioning towards the same.
The mid-sized private bank set aside provisioning of Rs 858 crore against the divergences. It includes provisions made towards the cement account at Rs 227.9 crore.
This led to an increase in bank’s gross NPAs for the fiscal year ending March 2017.
For country's largest private lender ICICI bank, the classification of gross NPAs due to divergences stood at Rs 5,105 crore, the bank said in a post results conference call.
As on March 2017, Yes Bank’s gross NPAs in absolute terms doubled to Rs 2,018.56 crore compared to Rs 1,005.9 crore in the previous quarter. From a year ago, the gross NPA figure jumped 169.51 percent from Rs 748.98 crore.
In percentage terms, the gross NPA figure stood at 1.56 percent of the loan book from 0.85 percent sequentially. Net NPAs for the bank stood at 0.81 percent (Rs 1072.3 crore) compared to 0.29 percent (Rs 342.4 crore) sequentially.
After duly factoring the provision impact of divergences, banks credit cost for FY17 is at 53 basis points (bps or percentage points), the annual report said.
In a note Morgan Stanley has maintained that downside risks still remain to their target price of the bank.