Upcoming Webinar:Join the webinar on ' Unique ways of participating in agri commodity derivatives' on June 18, 5pm. Register Now!
you are here: HomeNewsBusiness

RBI rejects Yes Bank's ARC proposal citing 'conflict of interest': Report

In Septemeber last year, Yes Bank sought the approval of the RBI to launch the ARC and was planning to operationalise it within six months of securing clearance.

March 15, 2021 / 07:17 AM IST
RBI declines Yes Bank's ARC proposal.

RBI declines Yes Bank's ARC proposal.

Private sector lender Yes Bank's proposal to set up an asset reconstruction company (ARC) has been rejected by the Reserve Bank of India (RBI), reported Mint, citing two sources.

Most of the stressed loans of Yes Bank are declared fraud cases and hence cannot be transferred to an ARC.  Hence citing a conflict of interest the proposal was turned down, the report stated.

In Septemeber last year, Yes Bank sought the approval of the RBI to launch the ARC and was planning to operationalise it within six months of securing clearance.

A Yes Bank spokesperson declined to comment on the issue to the paper. Moneycontrol could not independently verify the report.

The bank was expecting to transfer nearly Rs 500 billion of bad loans to the ARC, reported Reuters.

Close

"We are likely to put in an initial capital of Rs 10 billion while the foreign investor will put in nearly Rs 25 billion,” Prashant Kumar, CEO of Yes Bank, told Reuters.

As on December 31, Yes Bank had reported bad loans as a percentage of total assets at 15.36 percent. Without the apex court’s stay on asset classification, the gross non-performing assets (NPA) ratio would have been 20 percent.

The lender has also initiated a debt recast for loans worth Rs 8,062 crore as on December 31, but these have not yet been implemented. The RBI has given banks three months to implement retail recasts and six months for corporate loans.
Moneycontrol News

stay updated

Get Daily News on your Browser
Sections