The Security and Exchange Board (SEBI) on Saturday asked HDFC Bank to identify individuals, including bank officials responsible for the leakage of its financial results, as the markets regulator has found inadequate controls at the lender as 'prima facie' reason for the leak.
In the high-profile leakage case where sensitive financial details of various companies, including HDFC Bank, got leaked on WhatsApp before their formal announcement, Sebi virtually censured the top private sector lender and asked it to strengthen the systems and controls to check any such leak in future.
In an order, the Securities and Exchange Board of India (Sebi) said it can prima facie be inferred that the unpublished price sensitive information (UPSI) relating to financials of HDFC Bank was leaked.
"Such leakage is prima facie attributable to the inadequacy of the processes/ controls/ systems that HDFC Bank as a listed company had put in place," the Securities and Exchange Board of India (Sebi) said.
Last year in December, the regulator had, in a similar ruling, ordered Axis Bank to strengthen its systems and conduct an internal probe after finding that the company's results for the June 2017 quarter were "either identical or matched closely with the figures" that were in circulation on WhatsApp prior to an official announcement.
"HDFC Bank shall strengthen its processes/ systems/ controls forthwith to ensure that such instances of leakage of unpublished price sensitive information do not recur in future," Sebi said in its latest order.
Sebi has also directed the bank to submit a report on the present systems and controls and how they have been strengthened, who are the persons responsible for monitoring such systems and the periodicity of monitoring.
"HDFC Bank shall conduct an internal inquiry into the leakage of unpublished price sensitive information relating to its financial figures including NPA (non-performing asset) results and take appropriate action against those responsible for the same, in accordance with law," Sebi said.
As per the order, the scope of inquiry should not be limited to the role of persons, including members of committees involved in generation of the original data for the purpose of determination of key figures pertaining to financial figures including gross non-performing assets (GNPA).
Sebi said the purview of inquiry should also go beyond those involved in the consolidation of the figures for the financial results, preparation of board notes and presentations as well as dissemination of information relating to financial results in the public domain.
HDFC Bank has to complete the inquiry within three months and file a report to Sebi within seven days thereafter, the regulator said.
Sebi had initiated a preliminary examination in the matter of circulation of UPSI through WhatsApp groups.
During the course of a preliminary examination, it was observed that in respect of HDFC Bank, the messages circulated on WhatsApp closely matched the quarterly financial results of HDFC Bank for June 2017, which were published subsequently.
PTI