The Reserve Bank of India (RBI) on Tuesday slapped a Rs6 crore penalty on Yes Bank Ltd for breaching its rules on classifying non-performing assets and failing to report a security incident involving its ATMs on time. Separately, RBI also imposed a Rs2 crore penalty on IDFC Bank Ltd for breaching regulations on giving loans.

In a notification, RBI said Yes Bank violated the Income Recognition Asset Classification (IRAC) norms on dealing with assessment of bad loans as of March-end 2016. Yes Bank was one of three private sector lenders which had reported a sharp divergence between their asset quality classification and provisioning for 2015-16, and what the RBI deemed necessary.

In its annual report for 2016-17, the bank said its bad loan classification of Rs748.9 crore at the end of March 2016 varied from that of RBI to the tune of Rs4,176 crore.

RBI’s bad loan assessment was 558% more than what Yes Bank had reported.

RBI also said Yes Bank failed to report a cyber-security attack on its ATM network within the prescribed timeframe.

Card data of 3.2 million users was stolen between 25 May and 10 July 2016 from a network of Yes Bank ATMs managed by Hitachi Payment Services Pvt. Ltd, but it was only in September that year that banks and payments services providers became aware of the extent of the breach, Mint reported on 20 October 2016.

“The statutory inspection of the bank with reference to its financial position as on March 31, 2016 revealed, inter alia, violations of various regulations issued by RBI in the assessment of Non-performing Assets (NPAs). A cyber-security incident involving ATMs of the bank was also not reported by the bank within the prescribed timeframe,” said RBI in its notification.

Phone calls to a Yes Bank spokesperson had not elicited a response at the time of going to press.

In the case of IDFC Bank, RBI said the bank failed to comply with the regulations pertainting to sanction/renewal of loans and advances.

“The status report of the bank based on its financial position as on December 31, 2016, revealed, inter alia, non-adherence with certain directions pertaining to sanction/renewal of loans and advances,” the notification said.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” it added.

IDFC Bank declined to comment. #casansaar (Source - LIveMint)