Why YES Bank shares fell over 4% in intraday trade

YES Bank share price tumbled over 4 per cent in early deals on the Bombay Stock Exchange (BSE) on Monday after the lender's auditor reportedly demanded a fresh audit into whistleblower complaints against the bank and its founder Rana Kapoor. The bank, however, in a clarification to the exchange said that it has made necessary disclosure about the same in the financial results for the quarter ended September 30, 2019.

Reacting to the news, YES Bank share price declined as much as 4.51 per cent to touch a day's low of Rs 65.60 apiece after opening marginally higher at Rs 69.10 against previous closing price of Rs 68.70.

In a similar fashion, shares of YES Bank were trading 1.89 per cent lower at Rs 67.40 on the National Stock Exchange (NSE). The scrip touched an intraday high and low of Rs 69.25 and Rs 65.60, respectively.

Yes Bank's statutory auditor, BSR & Co., has sought a fresh audit into whistleblower complaints against the bank and ex-CEO Kapoor, expressing displeasure over the way the special audit was conducted by JLN US & Co, as per a Mint report.

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In September 2018, a whistleblower had raised allegations of irregularities in the bank's operations, potential conflict of interests in relation to its founder Rana Kapoor and misclassification of bad loans. Based on the complaints, the audit committee of Yes Bank's board had ordered the special audit into the matter this year. The inquiry report was reviewed by the board and was handed over to the Vadodara-based JLN US & Co to independently examine the matter.

As per report, JLN informed the board and statutory auditor that it has not been able to prove some of the whistleblower's allegations as it had limited access to documents. These included bank documents and transaction records for some of the real estate deals, including Kapoor and his family office, and large borderline credit exposures.

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In September quarter earnings report, YES Bank in notes to accounts mentioned about the complaint. "The bank became aware in September 2018 through communications from stock exchanges of an anonymous whistleblower complaint alleging irregularities in the bank's operation, potential conflicts of interests in relation to the former managing director & CEO and allegations of incorrect NPA (non-performing loans) classifications," it said.

In October this year, Kapoor and his group entities sold 2.16 per cent stake worth Rs 510 crore in YES Bank through an open market transaction. YES Capital (India), Morgan Credits Private and Rana Kapoor jointly sold 552 lakh shares, or 2.16 per cent, stake in the open market during September 26 to September 27.

Edited by Chitranjan Kumar