The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 1 crore on Yes Bank Ltd.’s two promoter entities viz. Morgan Credits Ltd and Yes Capital (India) Pvt Ltd.
These two entities were fined on Tuesday for failing to disclose the encumbrance or pledge on their shareholding in Yes Bank.
The allegation was that these two promoter entities did not make requisite disclosures of encumbrance of shares of Yes Bank to the stock exchanges and the lender, thereby violating the SAST (Substantial Acquisition of Shares and Takeover) Regulations.
“It is undisputed fact that the Noticees (two Yes Bank promoter entities) have not made any disclosures to YBL (Yes Bank) and the stock exchanges as alleged rather they have contended that the transactions in question were not covered within the scope of a pledge," said SEBI in its order.
While Yes Capital had raised a total of Rs 630 crore from Franklin Templeton Mutual Fund, Morgan Credits had raised Rs 950 crore from Reliance Mutual Fund.
Yes Bank had raised the amount through unlisted Zero Coupon Non-Convertible Debentures (ZCNCD) in September 2017 and as part of the transaction, it had agreed to a proviso that it will maintain a cover ratio of 3.3 times till 12 months and 3 times thereafter.
Meanwhile, Morgan Credits had raised the amount through unlisted ZCNCD in April 2018 and as part of the transaction, it had agreed to a condition that it will always maintain a cap on the borrowing limit at 0.5 times.
Yes Capital and Morgan Credits held 3.27% and 3.03% stake, respectively in Yes Bank, as per the shareholding pattern of Yes Bank filed with the stock exchanges on March 31, 2019.
Yes Bank, in its submission to SEBI in March 2019, had stated that it was not kept informed about the transactions entered into by Yes Capital and Morgan Credit and it has not received any disclosure from them about any encumbrance on their shareholding in the bank.
BSE and NSE stock exchanges, too, in February 2019 had said that no disclosures were made to them with regard to these transactions.
SAST Regulations specify that a promoter must disclose encumbrance of its shares and the term 'encumbrance' includes a pledge, lien or any such transaction.