Shares of Yes Bank Ltd shed over 7% in intraday trade on Tuesday after a media report said that one of the bank’s clients, a Mumbai-based real estate company, has defaulted on interest payment on a Rs 1,200 crore loan.
The Economic Times reported that Radius Developers has delayed interest payments to Yes Bank by 45-60 days. The company reportedly has an exposure of about Rs 5,500 crore to the banking system. “The Radius Developers account is currently in the SMA-2 category and it has delayed interest payments of Rs 30 crore,” a Yes Bank official familiar with the matter told Economic Times. “We have made requisite provisions on the account if they don’t pay before the 90-day period.”
Meanwhile, a Radius Group spokesperson told the newspaper that the company will be paying the interest component of Rs 30 crore to Yes Bank by July 5.
“The full interest payment has been made this Saturday, so the question of us defaulting does not arise. The industry at large is undergoing a restructuring and our plans for 2019 of fundraising from an international fund are underway and going strong,” a Radius Group spokesperson later said via email.
The Yes Bank stock has lost over 70% of its value in the last one year, with major portion of the correction happening after former chairman Rana Kapoor was asked to step down by the Reserve Bank of India (RBI) earlier this year.
The stock has been under tremendous pressure due to fears of further slippage in asset quality. Yes Bank recently underwent a massive balance sheet clean-up task under new chief executive Ravneet Gill. It posted a whopping Rs 1,506 crore net loss during the March quarter for as provisions soared over nine times.
According to an IIFL report dated 18 June, Yes Bank still has debt exposure of Rs 7,590 crore to debt-laden companies including Rs 3,700 crore in DHFL as of March 2019 and Rs 550 crore in Jet Airways, which may require material haircuts.
CEO Ravneet Gill, however, assured investors last month that the worst is over for the bank and there are unlikely to be any further nasty surprises due to higher bad loans or slippages from its watchlist. In interviews given to various media houses, Gill said the bank has already come clean on potential bad loans and provided for contingent liabilities.
At 2:24 pm, shares of Yes Bank were trading at Rs 101.70, down 6.83%, on BSE.