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RBI looks into Yes Bank's exposure to IL&FS, DHFL, NBFCs: Report

RBI looks into Yes Bank's exposure to IL&FS, DHFL, NBFCs: Report

Yes Bank had disclosed an exposure of over Rs 2,600 crore to the entities associated with the troubled IL&FS group

Last month, while announcing its second quarter results, Yes Bank had disclosed an exposure of over Rs 2,600 crore to the entities associated with the troubled Infrastructure Leasing and Financial Services Ltd (IL&FS) group. Although Senior Group President for financial markets at the bank, Rajat Monga, at the time had clarified that the accounts were all standard and the entire exposure was to special purpose vehicles lower down the order, the Reserve Bank of India (RBI) reportedly has the bank under the scanner.

Two senior officials in the know told Mint that the apex bank yesterday began inspecting Yes Bank's exposure to IL&FS, Dewan Housing Finance Corp. Ltd (DHFL), Indiabulls Group as well as Sudhir Valia-promoted entities Fortune Financial Services India Ltd and Suraksha ARC. This development follows a letter that the RBI sent to Yes Bank last Thursday, seeking detailed statements regarding these exposures.

"RBI is [now] trying to see the interconnectedness between Yes Bank and non-banking financial companies (NBFCs) against the backdrop of the IL&FS crisis," said a source. "These investigations are different from the annual inspection, as they are quick and targeted in nature. However, there is nothing unusual."

The daily added that the RBI's banking supervision team is currently perusing all statements since the date of sanction of loans to these entities, internal and statutory auditor observations and terms of disclosures, among other documents. Significantly, 3.2 per cent of Yes Bank's loan book is exposed to housing finance companies and 2.6 per cent to NBFCs.

In the wake of the IL&FS default, and the ensuing liquidity crunch for NBFCs and mutual funds, RBI and Sebi have been closely monitoring developments in the financial markets. The markets regulator, in fact, has also sought details from mutual funds about their exposure to all NBFCs and housing finance companies.

The RBI's attention comes at a bad time for the Yes Bank. After the RBI in September asked the bank to find replacement of founder MD and CEO Rana Kapoor by January 31, there's been a flurry of resignations by board members. In the past two weeks, three board members, Ashok Chawla, Vasant Gujarathi and Rentala Chandrashekhar, have stepped down, and the stock has dived down 16 per cent in the bargain.

(Edited by Sushmita Choudhury Agarwal)

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