The Reserve Bank of India (RBI) has fined Yes Bank Rs 11.25 lakh under the Payment and Settlement Systems Act of 2007, according to reports.
“(The) Reserve Bank of India vide its speaking order dates April 22, 2019, imposed a penalty of Rs 11,25,000 under the Payment and Settlement Systems Act, 2007,” Yes Bank said in a regulatory filing.
The violations involve “issuance and operation of Prepaid Payment Instruments (PPIs), in connection with certain product features of an open loop prepaid card (co-branded) previously issued by the bank,” Yes Bank said.
Yes Bank said it launched the product as a pilot program in September of 2017, and that it was discontinued in March of 2018.
The bank also faced criticism from the RBI in February, when the RBI contended that disclosures from an audit report were released in an effort to mislead the public.
According to a report in Bloomberg, Yes Bank released findings from a Reserve Bank of India risk assessment report, saying that while the regulator found several breaches across different functions at the bank, it only found “nil divergences” in how the company assessed bad loans for the year ending in March 2018.
With the company facing allegations it underreported the number of bad loans, news of the nil divergences sent the stock flying. The stock last week hit a high not seen since 2005, noted Bloomberg.
Yes Bank’s move to release information from the report raised the ire of the Reserve Bank of India, which viewed the news release as a way for the company to cherry-pick information and mislead its constituents.
In a letter to Yes Bank on Feb. 15, the Reserve Bank of India said that “the disclosure of just one part of the RAR is viewed by RBI as a deliberate attempt to mislead the public.” RBI went on to say that Yes Bank broke rules around confidentiality and regulatory guidelines by releasing information from the risk assessment report.
Those actions warned the regulator could result in the company getting hit with more regulatory actions by the Reserve Bank of India, according to the report.