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How ‘pledge YES make YES bank’ Ravaged

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YES, the bank appeared in terrible situations..?

Beginning in 2004

  1. Yes, Bank was inaugurated in 2004 by Rana Kapoor and his near Ashok Kapoor in collaboration with Rabo Bank. Its IPO began in 2005, which was 300 crores.
  2. In 2005, Rana Kapoor received Entrepreneur of the Year and in 2009 the bank acquired the fastest extension award with a stability sheet of Rs 30000 crore.
  3. Yes, Bank was placed on NSE in 2015 and in 2017 the bank allocated Rs 4906.68 crore through QIP, the largest amount raised by a private sector bank.

This is how the altercation began?

  • By the way, about 4 years after the bank started, the spark of a racket began in the promoter family and its effect started to look on the bank’s business.
  • But after the death of Ashok Kapoor in the 26/11 terror attack in Mumbai, this division took a big order. The fight began over the control of the bank between Ashok Kapoor’s wife Madhu Kapoor and Yes Bank founder and CEO Rana Kapoor.
  • Madhu wanted a place on the committee for her offspring. The matter led the court of Mumbai and Rana Kapoor won.

Saying yes to each credit 

  1. Gradually matters of compliance with corporate governance started coming up in Yes Bank. Also, there was a tremendous liability on the bank, due to which Rana Kapoor gave more importance to private relationships than the debt and the process for its reconstruction.
  2. To repay the loan, the promoters slowly started selling its pale in the bank. In October 2019, it reached such a time that even Rana Kapoor had to sell his parts and his group’s stake in Yes Bank came down to 4.72.
  3. Many of those present on the bank’s superior posts left Yes Bank, including senior organisation president Rajat Monga.

Corporate customers plunge

  • Yes, Bank has more corporate clients than retail in its list of clients. Saying yes to every loan of Yes Bank was dominated by that.
  • Most of the firms the bank has given loans are in decline. Among the bank’s borrowers are RCom owners Anil Ambani, Essel Group, Essar Power, Varadaraj Cement, Radius Developers, IL&FS, Dewan Ha Using, Jet Airways, Cox & Kings, CG Power, Cafe Coffee Day, Altico etc. When many of the lending corporations started going broke and the loan was not taken back, the bank’s position also started to depreciate.

Besides this…

  • Moody’s Investors Service on Friday lowered Yes Bank Ltd’s rating following RBI imposing a 30-day end that prevents the lender from making payment to its lenders. “The numbers remain under investigation, with the direction possible,” Moody’s stated downgrading Yes Bank Ltd’s long-term foreign-currency issuer rating to Caa3 from B2. Moody’s has also downgraded the bank’s long-term foreign and local currency bank deposit ratings.
  • The downgrade “is a result of an event of default triggered by the Reserve Bank of India’s (RBI) 30-day moratorium, which prevents Yes Bank from making a full and timely payment to its senior creditors,” the rating agency said in a statement.
  • Moody’s said it expects a higher probability of low loss rate for depositors. “The assurance made by the RBI to protect depositors’ interests provides greater certainty that the risk of losses to depositors is lower.” Yes Bank’s long-term ratings remain under review with the direction uncertain, reflecting Moody’s expectation of potential for different outcomes.
  • A prompt resolution of Yes Bank, that minimises losses to depositors and creditors could result in a stabilisation or upgrade of the bank’s ratings, it said adding a protracted resolution that extends the moratorium could result in lower recovery rates for the bank’s creditors and could lead to a further downgrade of the bank’s ratings.The RBI action also confirms Moody’s view that the bank’s standalone viability, in the absence of extraordinary support from Indian authorities, is in question,” the statement said. “Nevertheless, Moody’s expects high recovery prospects for the principal and interest on the bank’s deposits, as indicated by the final rating on those instruments.”

Moody’s could upgrade the ratings or change the outlook to stable if authorities conclude a material capital raise, reconstruct the bank’s assets and liabilities, or amalgamate the bank with another stronger bank, such that any action taken reduces the risks of losses to senior creditors and depositors.

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