YES Bank share jumps 29% after RBI gives clean chit in reporting of bad loan

The YES Bank share price rose in early trade today after the private lender said RBI has not found any divergence in the asset classification and provisioning done by the lender during 2017-18. The YES Bank share price rose 28.96% to 218 level compared to the previous close of 169.05 in trade today. The YES Bank share opened higher with a gain of 10% at 185.95 on the BSE.

Mustafa Nadeem, CEO at Epic Research said , "Yes bank has given a huge gap up today post news stating 'RBI has found no divergence in its BS on provisioning and its asset classification'. This is in line with our technical view which supports the fact that stock is cheaper at levels below 180 - 175. We believe the stock is cheaper at those levels and any opportunity should be utilized by investors to have position/investment with a medium-term perspective. We expect stock is due on the upside to 250 levels. This news at lower levels has worked as catalyst for Yes Bank."

The YES Bank share price has gained 12.71% since the beginning of this year but lost 36.02% during the last one year. Total 33 of 49  brokerages rate the stock "buy" or 'outperform', 11 "hold" , three "underperform" and two "sell", according to analysts' recommendations tracked by Reuters. The Reserve Bank of India (RBI) assesses compliance by banks with extant prudential norms on income recognition, asset classification and provisioning (IRACP) as part of its supervisory processes.

"As part of this process, Yes Bank has received the risk assessment Report for 2017-2018. The report observes NIL divergences in the bank's asset classification and provisioning from the RBI norms," the bank said. The RBI conducted its first asset quality review (AQR) of banks, started in 2015, in order to find corporate loan accounts with severe financial weakness, but was still classified as standard accounts on the books of the lenders.

Post this review, RBI found a large divergence of Rs 4,176 crore in the reported gross NPAs in the books of accounts of Yes Bank for 2015-16.  Further, the RBI judged gross NPAs at Rs 8,373.8 crore for Yes Bank for 2016-17 against the declared gross NPAs at Rs 2,018 crore. Thus, there was a divergence of Rs 6,355 crore or three times the reported amount.

With agency inputs

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