Will the Longevity of Yes Bank get a Yes or No?

Yes Bank Crisis

The Yes Bank Crisis had a major impact on the Indian economy and financial market, even the stock market of India witnessed a great shift in the figures. Thus it has been the talk of market amidst the marketers, investors and Yes Bank customers on the same level as the CoVid-19 updates amidst the people of the world. On one hand, while the world is affected by Coronavirus and India is intrigued about making Janta Curfew a success, the key officials and promoters of Yes Bank are trying their best to wash hands from this scam.

While the moratorium imposed over Yes Bank had been lifted by the government, it feels like the situation is still in the glitch. In this article, you will get to know all about the Yes Bank Scam from the beginning to the recent updates.

Yes Bank Gist of the Matter

Yes Bank, founded in the year 2004 by Rana Kapoor and Late Ashok Kapur, is one of India’s fastest-growing private sector banks. But the last few years had been a piece of bad news for Yes Bank when some of its major borrowers like IL&FS, DHFL, etc. went into crisis, thereby leaving the bank with bad loans and a hovering situation of its decline. This situation worsened by March 2014 when the bank’s loan increased four times and deposit rate failed to keep pace, but even then everyone overlooked the situation resulting in the imposition of moratorium over the bank by the government of India on 5th March 2020 up to 3rd April 2020, on the suggestion of Reserve Bank of India.

This led to a doom over the associated consumers, borrowers and investors of Yes Bank along with building up a situation of sudden hassle and panic. RBI undertook Yes Bank, drafted a scheme of reconstruction and gave out maximum 49% of Yes Bank’s stake to State Bank of India. Then only, Mr Prashant Kumar was appointed as the administrator of the Yes Bank by RBI.

While RBI entrusted a plan to fix Yes Bank crisis, the Enforcement Directorate kept the investigation going and arrested Rana Kapoor, the founder of Yes Bank, to be kept under scrutiny and remand.

Yes Bank Present Scenario 

 Although the measures taken by the RBI were criticized by some due to a certain delay, it seems like the government has finally coped up with the severity of this situation and now working towards the betterment. Since the moratorium that was supposed to end on 3rd of April was lifted on 18th March only, the hopes rose up. Yes Bank confirmed this in a tweet:

However, this doesn’t leave us in relief, as even when the services have been resumed, a recent poll report by Money Control reveals that 70% of the Yes Bank consumers have accepted that they will retrieve their complete money from their Yes Bank accounts.

On one hand, Yes Bank has started a new journey with SBI and other foreign investors trying to recover the current situation. According to The Economic Times, the loan exposure have been pegged as such – the Anil Ambani led the group at Rs.12,800 crores, Essel Group at Rs.8,400crores, DHFL at Rs 3,700 crores, Avantha at Rs 1,900 crores, Jet Airways at Rs 550 crores and Indiabulls at Rs 425 crores as of December 31.

The current Twitter bio of Yes Bank’s official account reads “We start a new journey, backed by India’s best. We’ve redefined YES and it’s dedicated to YOU. #YESforYOU”  Although the current staffing is affected by CoVid-19, the bank timings were scheduled for one hour earlier from 19 March to 21 March, starting at 8:30 am.

Yes Bank Current Bailout

The last market share price of Yes Bank is listed at Rs 45.90, although the listing after the recovery by the SBI, showed 50% hike in the then stake price of the Yes Bank’s share.

To recover the losses, SBI has infused about Rs 7,520 crore at Rs 10 per share for 49 per cent stake in Yes Bank on March 12, 2020. The other lenders like HDFC, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank, Federal Bank and Bandhan Bank also joined in to collectively infused Rs 3,950 crores to pick up the minority stakes.

The net banking services of the bank are also operational. While the inquisition with Rana Kapur and his family revealed the investment in the establishment of several shell companies on the name of his daughters, the ED has also issued around 18 notices for the key officials and promoters of Yes Bank, who are being called for an enquiry. The recent name in the list of questioned key persons is Subhash Chandra of Essel Group. While Anil Ambani and Chandra have answered the enquiry, there were several other stakeholders which denied travelling to attend the enquiry on the name of CoVid-19.

The majority of the losses have been recovered by the combined infusion of the SBI and other lenders and the bank is now fully operational. The customers are able to withdraw their money from the accounts which were blocked from the 5th of March. The panic drive circumstances are over, but there are still several scenarios which need clarity and the ED is focused on resolving the situation completely.