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1. YES BANK CASE
STUDY
BY - YASH OZA TYBIM ROLL NO 14
- DHIRESH MANGE TYBIM ROLL NO 30
- PURVI CHUDASMA TYBIM ROLL NO 10

2. INDEX
 INTRODUCTION
 COMPANY PROFILE
 RISK PROFILE
 FACTORS THAT LED TO DOWNFALL OF BANK
 SOLUTIONS TO THE RISK MANAGEMENT PROBLEMS
 RECOMMENDATIONS
 BIBLIOGRAPHY

3. INTRODUCTION
Yes Bank was incorporated as a Public Limited Company on
November 21, 2003. Subsequently, on December 11, 2003,
RBI was informed of the participation of three private
equity investors namely (Citicorp International Finance
Corporation, ChrysCapital II, LLC and AIF Capital Inc.),
to achieve the financial closure of the Bank
Yes Bank obtained its certificate of Commencement of
Business on January 21, 2004. Subsequently, in March
2004, the Bank achieved the mobilization of the initial
minimum paid up capital of Rs. 2,000 million.

4. COMPANY PROFILE
• This study traces out the genesis of Yes bank Crises and the reasons for
downfall of a major Indian Bank. This recent exceptional case has
reached its epitome in terms of recovery though, but studying on this
case will help me to understand the mindset of the bank to engage into
dialogues with some soon to be bankrupt companies and acting as their
sole survivor without taking into consideration its own balances.
Incorporated in 2004, Yes Bank was founded by Rana Kapoor who headed
the bank till 2018. His other co-founder — Ashok Kapur suffered demise
during the 26/11 attacks in Mumbai. Since its inception, YES BANK has
adopted international best practices, with the highest standards of
service quality and operational excellence. It offers comprehensive
banking and financial solutions to all its customers. Using technology to
provide superior customer service is central to YES BANK’s business
philosophy. By offering innovations such as mobile banking, two-factor
authentication, radio-frequency identification and advanced speech-
enabled interactive voice-response systems, YES BANK delivers a
differentiated service to its commercial and retail customers.

6. RISK PROFILE
• The bank was at its peak but every investor felt something suspicious with such high
numbers and finally in 2017, RBI sensed a problem with this bank and started
monitoring over its governance issues and finally pointed out that Bank was hiding
its actual NPAs.
• It was promptly caught by the RBI in 2015, 2016 and also in 2017 which involved the
RBI directing Yes bank along with several other banks to report transparently.
• The bad or unrecoverable loans given out by Yes Bank stood at Rs 50,396 crores as
of September 2019.
• With news of Yes Bank shares tumbling with over 85% downfall and founders
accused of money laundering, made Yes Bank hard to be recognized as the same
bank that once attracted so many retail and veteran investors.

7. FACTORS THAT LED TO DOWNFALL
OF BANK
 Bad investments: One of the main reasons that led to such massive fall were
the bank’s decisions for entering into some risky investments which were
clearly in no condition as a fruitful debt payers. It soon became the sole
lending partner to such organizations leading to massive profits but only
temporarily. While bad loans piled up, the bank did not make enough
provisions in its profits. Its provisions were the lowest among comparable
banks. Yes Bank blindly went on a loaning spree. Outstanding loans of YES
bank grew from INR 55,000 crore in FY14 to INR 2.41 trillion in FY19.
 Low PCR: As bad loans piled up, companies were not paying back for long and
enough provisions for such cases were not made in the profits thus, this led to
low PCR of the bank. The bank’s Provision Coverage Ratio in FY19 was 43.1%
which was the least among other private banks as also strictly asked by RBI
that PCR > 70% is only desirable.

8. FACTORS THAT LED TO DOWNFALL OF
BANK
 Manipulated NPA: Soon all those risky loans were unable to pay back on time and
yes Bank’s NPAs started piling up with rapid rate with advances rising by 334%
between FY 2014 and FY 2019 and the bank’s gross non-performing asset
percentage, that is the percentage of loans overdue for more than 90 days, zoomed
to 7.39% as of September 2019, the highest among comparable banks amounting to
₹17,134 crores and ultimately. UBS, a global financial services company raised
concerns about the asset quality of the YES bank. They released a report mentioning
the rising Non-performing assets (NPAs) of the bank. Despite knowing the financial
inability of existing borrowers, the bank lent more money to them.
 High CDR: Some noticed early the bad loan mess and Yes Bank started facing
outflow of liquidity and dropped all confidence in the bank. Thus, customers
withdrew large amounts and as a result in FY18 and FY19 the Credit Deposit Ratio of
the Yes Bank crossed 100% i.e. now the bank lent more than what it received.

10. z SOLUTIONS
Government took over the bank and came with a draft plan- ‘Scheme of
Reconstruction’ which said State bank of India (SBI) will buy 49% stake and bring in
the needed capital with ₹7250 crore investments. It used the instrument of moral
suasion on SBI to implement this decision. SBI also appointed Prashant Kumar as the
new CEO who had earlier worked in SBI and has an experience of over 30 years in
the Banking sector. The SBI also nominated two officers as directors in the additional
new board with RBI to appoint more directors.
Along with this, HDFC and ICICI also invested ₹1000 crore each, Axis Bank invested
600 crores, Kotak Mahindra Bank invested 500 crores, Bandhan Bank invested 300
crores forming the dream team along with Jhunjhunwala, Damani and Azim Premji
Foundation altogether making up an investment of over 12000 crores

11. RECOMMENDATIONS
• · Yes Bank crisis is not exactly new or unique and its problems with mounting bad loans reflect the
underlying woes in the financial sector ranging from real estate to power and non-banking financial
companies.
• · The choice of SBI as the investor to affect the bailout reflects the paucity of options the government
has. With several other public sector banks currently engaged in merging with weaker peers as part of
the Centre’s plan, it has fallen on the country’s largest bank to play the role of a white knight to a
private rival. While Yes Bank’s depositors are sure to heave a huge sigh of relief, India’s banking sector is
still far from out of the woods. Clearly, the RBI and Centre have their task cut out in ensuring that the
need for such bailouts is obviated.

12. WWW.WIKIPEDIA.COM
WWW.ECONOMICTIMES.COM

13. THANK YOU!