YES bank is in a bad position due to its non-performing assets, poor governance and its inability to pay off the dues. Rana Kapoor built YES bank from scratch to its success of 3.4 lakh crore in a decade.

Rana Kapoor is known for his risk taking ability which paid off for YES bank for a while when it had an all-time high of 404. Having all the contacts in the world, Rana wanted to be different, he leant the art of making deals with the companies who found it difficult to get finance from existing lenders. This turned out to be the biggest masterstroke and loss for the company.

The woes of YES bank started 2 years ago when the banks were asked to reveal the non-performing loans. YES bank had Rs 4400 crore more than around Rs 800 crore reported in the audited accounts of March 2016. The differences increased to over Rs 7000 crore in the next year.

YES bank was unable to raise capital to address the loses, thereby losing the confidence of the investors. YES bank has reported loses for the last 4 quarters. RBI issued orders for R Gandhi, former deputy governor to be part of the board due to the accumulation of non-performing assets.

Due to corporate governance and risk management issues, RBI turned down the reappointment of Rana Kapoor as MD and CEO.

After this, The share prices crashed from over Rs 400 to less than Rs 100 due to poor corporate governance.

The board appointed Ravneet Gill as the MD and CEO of Yes Bank.

YES bank constantly tried reassuring RBI that they are in touch with top investors who would plough money into the bank. In November 2019 the bank announced that it would raise 2 billion dollars but no such deal has happened so far.

Moreover, many customers are withdrawing from the accounts decreasing the liquidity of the bank.

On 5th March, The stocks of YES bank went up by 25% to hit a high of 37.7 after the news of SBI and LIC pumping funds.

Later that evening, SBI and LIC were said to pick up 49% stake at Rs 2 per share when the shares were trading at Rs. 37 in the market

RBI also suspended Yes Bank’s Board of Directors and set a limit od Rs 50000 for withdrawal per day until April 13, 2020.

Due to all these events, On 6 March 2020, YES bank crashed by 85% and hit an intraday low of Rs 5.65 per share and closed around Rs. 15.

RBI does not want YES bank to stoop to this stage as people would slowly start losing faith in the banking system.

RBI has proposed a scheme for reconstruction of YES bank and has asked the public domain for its suggestions. Under the reconstruction scheme, it has proposed to change the authorized capital to Rs 5000 crores and equity shares would be altered to 2500 crore shares of rupees 2 each.

SBI has now agreed to purchase 49% stake for Rs 10 per share for a value of Rs. 2450 crores

RBI and Finance ministry are now trying to revive Yes Bank and guaranteeing the safety of their deposits so that public doesn’t lose faith in the banking system.

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