Private sector player Yes Bank is facing disputes on derivatives products sold to two clients, with the value of the deals estimated at Rs 14 crore, according to the bank's managing director and chief executive officer Rana Kapoor.

The first transaction, worth Rs 9 crore, involves an unnamed textile company, while the other pertains to an auto component maker. The product sold to the auto company is due for maturity later this month.

"A part of the contract with the textiles company has crystallized, but we are well covered for both the issues," Kapoor said.

The provisions made in the third and the fourth quarters of 2007-08 were adequate, according to Kapoor, to deal with the two cases.

Yes Bank had made a provisioning of Rs 17 crore to deal with the deteriorating credit environment in the fourth quarter of the last financial year and it was termed as general provisions.

But, in an interaction with Business Standard, Kapoor said the provisions had been made keeping the derivatives contracts in mind. He, however, did not throw any light on the number of contracts or the bank's exposure.

Though Yes Bank had told analysts earlier that it was attempting an out-of-court settlement, Kapoor said there was a legal standstill at this point of time. But there may be a change in status in about a week.

"As a policy, we do not want to settle with any player who does not pay 100 per cent… We cannot run the bank on the lines of an NBFC (non-banking finance company)," Kapoor said.

A host of private banks ranging from ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank are facing legal cases from companies which had entered into derivatives contracts but took a hit due to appreciation of the Japanese yen and the Swiss franc against the dollar.

Some companies have simply refused to pay, while others are alleging that mis-selling led them into speculative transactions that were beyond their networth in some cases. Banks on their part have argued that there were no such complaints as long as these companies were booking profits.

Kapoor has classified the companies into two categories, those that had the ability but were unwilling to pay, and "stray cases" with an inability to pay. "In both cases (where the bank is facing problems) there is an ability to pay," he said.