Name: Aftab Ghanchi

Roll: IU1984000011

COURSE : Int.MBA SEM-II

SUB : Business Economics

Topic: Yes Bank Crisis

FACULTY : Dr. Hardik Bhavishi

DATE : 24/04/2020
COMPARISON

PMC BANK YES BANK

Punjab & Maharastra #4 Largest Private Bank

Co-Operative Bank

₨. 11,000 CR DEPOSITS ₨.2 LAKH-CR DEPOSITS

800+ EMPLOYEES 18,000+ EMPLOYEES

3% OF UPI TRANSACTIONS 35% ALL UPI TRANSACTIONS

WERE DONE THROUGH THE PMC WERE DONE THROUGH THE YES
BANK BANK
HISTORY

 Founded by Rana Kapoor & Ashok Kapoor in 2004.

 2008 sees unfortunate death of Ashok Kapoor in the Attack

of 26/11.

 After which there is a legal battle between Ashok Kapoor’s

wife and Rana Kapoor as to who would control the
appointment of the Board of Directors.
THE FALL OF YES BANK

 Loans given to High Risk Companies.

 UBS Pointed in 2015 that the
accelerated growth of YES bank is
happening because they have been
giving loans to stressed companies.
 BAD Loans/NPAs (Non Performing
Asset)
 In 2017 The Reserve Bank Of India
noticed it.
 Started monitoring the YES Bank
more strictly.
 YES Bank was hiding it’s real NPA’s.

 RBI found difference of 3,000 CR

between the actual figure and the fake
figures sated by them.
 In SEP 2018, RBI Trims Rana Kapoor’s term as YES Bank
CEO.
 In NOV 2018, a chairman and two independent directors of
the bank resigned.
 The ratings of the bank continued
to fall down steadily.
 CARE Rating Firm accorded a
very bad rating to YES bank.
 Another rating firm, Moody’s
degraded the outlook of the YES
bank from stable to negative.
 In March 2019, Ravneet Gill
became the new CEO of the bank.
 But the problems had grown so
much the YES bank posted its first
ever quarterly loss in April 2019
 Their NPL ratio reached 8%
 In Nov 2019, Rana Kapoor sold away all of his shares of the YES
bank.
 Their total value was 142 CR

 In Sep 2018, he tweeted Diamonds are forever: my promoter

shares of YES bank are invaluable to me.
 In March 2020, RBI took up the entire
matter into its own hands.
 RBI placed a restriction that all those
who have deposited their money in
this bank Can’t withdraw more than
₨ 50,000 per month.
 The stock of YES Bank fell and so did
the sensex.
 In March 2020, ED
(Enforcement Directorate)
arrested Rana Kapoor.
 Under the allegation of fraud
and money laundering.
WHY DO DEPOSITORS SUFFER?

 All the money that is deposited by all the depositors in

the bank is not collected and kept by the bank one place
 It uses that money to extend loans to the other people.

 This is where the bank earns its profit.

DEPOSITORS LOANS
96%
100%
4%
BANK RUN
 When a bank is in crisis, then often the people want to
withdraw their money in panic. This is called “BANK
RUN”
WHO TOOK THE LOANS?
 Café Coffee Day, DHFL, Cox & Kings, Reliance, Essel
Group.
WAS THIS ONLY A COINCIDENCE?
 Why were BAD loans given Despite
RBI monitoring?
 A month before declaration of
restrictions bt the RBI, Adani
company stopped using the YES
bank.
 Vadodara smart city Development
company in Gujarat withdrew 265
CR from the bank.
NPA CRISIS

 Problem of NPAs in our country

has risen to such an extent that
there is no such major economy
in the rest of the world where
conditions are so terrible.
NPL RATIO

 NPL ratio is non performing loan ratio.

 NPL RATIO = BAD LOANS / TOTAL LOANS

 In India, this ratio touched 11% last year. Which is

worlds worst NPL ratio.
 The major economies include USA, UK, Germany, the
NPL ratio of these countries generally is less than 2%
 The recovery rate of India is 30% when compared with
other countries.
 Recovery rate refers to the chances of recovering the
money of the bad loans.
 In the rest of countries, the chances are around 80%
HOW TO SAVE THE BANK?
 The government will bail this bank
out.
 SBI has been already said that it
will buy a 49% stake in YES bank
at the cost of 2,450 CR.
 The money of the tax payers is
being used to bail out this bank.
 Is it good to use taxpayer money to
save private bank?
WHERE WILL THE GOVERNMENT GET
THE MONEY FROM?
 Government is wishing to collect this
money by selling PSUs. Ex. The
government has shown interest in
selling the entire stake of BPCL.
 A rescue plan has been given by the
RBI to save the YES bank
MADE BY,
AFTAB GHANCHI(11)