Yes Bank settles 'selective disclosure' of asset quality case with Sebi

The lender pays Rs 51.6 lakh as settlement charges under so-called consent mechanism; its compliance officer pays another Rs 14.45 lakh as settlement in the same matter

YES Bank has settled a case pertaining to ‘selective disclosure’ of assets quality with market regulator Securities and Exchange Board of India (Sebi).

The private sector lender settled the matter under the so-called consent mechanism paying Rs 51.6 lakh as settlement charges. Yes Bank’s compliance officer Shivanand Shettigar paid another Rs 14.45 lakh as settlement charges in the same matter.

In February, Yes Bank had made a disclosure to the stock exchanges stating that the Reserve Bank of India (RBI) had not found any divergence in the asset classification and provisioning done by the lender for 2017-18.  Following the disclosure, shares of YES Bank had skyrocketed 30 per cent. However, later the RBI had pulled up Yes Bank for making the disclosure over breach of confidentiality and selective revelations. The stock had later tanked.

While probing the matter, Sebi had observed that YES Bank had made selective disclosure by “highlighting "NIL" divergence which had significant positive impact on the price movement and had not disclosed other issues mentioned in the Risk Assessment Report (RAR) as observed by RBI such as lapses and regulatory breaches in various areas in its functioning.”

“Shivanand Shettigar, the compliance officer of Yes Bank 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 filed by the lender,” Sebi said in a order.

The market regulator later initiated adjudicating proceedings against the bank and Shettigar for not following the due procedure on disclosing material information. 

In June, YES Bank and the official submitted a plea to Sebi for settling the case under the consent route. Under this route, an alleged wrongdoer can settle a matter with Sebi without admitting or denying the guilt by paying a penalty or undergoing a market ban or both.