Sunday, February 17, 2019

Jefferies questions RBI's transparency

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Leading diversified financial group Jefferies says that there is a need for the Reserve Bank of India  to be more transparent on decisions like curtailing the term of Yes Bank’s managing director and chief executive Rana Kapoor. This comes two days after the private sector lender reported that the RBI had not find any divergence or under reporting of non-performing assets for fiscal year 2017-18.

The question of why the RBI ordered Kapoor to go remains unanswered. They believe it is time for the RBI to increase transparency on decisions that have a significant impact on minority shareholders, Jefferies, the brokerage, said in a note. The brokerage pointed out that the Yes Bank stock, which gained since the zero divergence news, had lost 30 per cent following the RBI curtailing the term of Kapoor in September last year.

It can be noted that the terms of both Kapoor as well as Shikha Sharma, the head of its larger rival Axis Bank, were curtailed by the regulator. At the time of announcing these decision, the regulator failed to communicate the reason for these actions. Both the banks were found to have under reported their stock of NPAs by a cumulative Rs 10,000 crore each for two consecutive fiscal years by the RBI, leading to a wide speculation if this was the reason for the removal.

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