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A bank plays an important role in maintaining the country’s economic condition. Because Yes Bank was the largest private sector bank, the Yes Bank crisis caused widespread panic in March 2020. There are the failures of a bank, whether public or private and can have far-reaching consequences. In March 2020, it was revealed that there is a high likelihood of a Yes bank failure, causing panic among depositors. The Reserve Bank of India decided to address this problem. For a period of 30 days, the Reserve Bank of India took over the Yes Bank board of directors.
“A brief history of Yes Bank”
Yes Bank is a bank that offers banking and financial services. There are approximately 1050 branches throughout India. Rana Kapoor and the late Ashok Kapoor founded Yes Bank Ltd. on November 21, 2003.
On January 21, 2004, the bank received its certificate of incorporation. In 2005, they made their retail banking debut with the launch of the International Gold and Silver debit cards in collaboration with MasterCard International. They issued a public offering in June 2005, and their shares were listed on stock exchanges.
The Bank received the Economic Times Corporate Dossier award in December 2005. The bank received the Financial Express Awards for India’s Best Banks in 2006. They formed a partnership with the Agriculture Insurance Company of India in April 2007. (AIC). Yes Bank was the first institution in the world to receive funding through IFC’s Managed Co-Lending Portfolio Program, and it was also the first Indian bank to raise a loan through IFC’s A/B loan facility. Yes Bank was ranked first in the 2008 Business Today-KPMG Best Banks Annual Survey. Yes Bank announced in September 2014 that it had received ratings upgrades from credit rating agencies ICRA and CARE for its various long-term debt programmes. Yes Bank entered the 30-share S&P BSE Sensex on December 18, 2017.
Yes Bank’s bad loans were discovered by the RBI in 2017. In 2018, the RBI ordered Rana Kapoor to step down as CEO. Chairman and two independent directors resigned from their positions in November 2018. Yes bank credit rates were lower at the time. In November 2019, Rana Kapoor’s estate sold all of his Yes Bank shares for a total of 142 crores.
Because the bank was lending money at high risk, the loan increased in such a way that the bank failed.
“Reason that led to Yes Bank Crisis”
Yes Bank is one of India’s largest banks. In India, there are both public and private sector banks. During the year 2020, Yes Bank faced a difficult situation. On March 5, 2020, the RBI imposed a 30-day moratorium on Yes Bank, superseding the private sector lender board and appointing Prashant Kumar as administrator. Depositors were permitted to withdraw up to $50,000 per person during the Moratorium. Furthermore, the primary goal of the Reserve Bank of India or the Government of India is to protect depositors’ money.
“A large amount of loan”
On March 31, 2014, Yes Bank’s book of accounts showed a loan of 55,633 crores and a deposit of 74,192 crores. Since then, loan growth has been rapid, reaching 2.25 trillion as of September 30, 2019.
The bank’s asset quality has also deteriorated. According to global financial firm UBS, Yes Bank is providing stressed loans to companies that are unable to repay the loan on time. Yes Bank took a significant risk. Such loans are referred to as bad loans.
“A large number of withdrawals”
While the loan amount was increasing at a rapid pace, withdrawals were also increasing. The bank experienced consistent withdrawals as a result of this balance-sheet burden, and the bank eventually failed. People have become concerned about bank run situations after hearing about the Yes Bank crisis. A bank run occurs when a large number of depositors withdraw their funds at the same time or within a specific time frame. The bank run is usually the result of panic rather than the true insolvency.
The Reserve Bank of India’s actions against Yes Bank
The Reserve Bank of India took over overall bank management.
The Reserve Bank of India had imposed a moratorium on Yes Bank for 30 days. There was no need to invest additional capital to address the NPA situation. The bank’s financial situation was insufficient to raise the capital. There was also a breach in corporate governance at the bank. This Moratorium was a temporary suspension of lender authority. Due to the Moratorium, depositors were permitted to withdraw up to Rs.50,000 per person and up to Rs.5 lakhs in medical or emergency situations. In the event of an emergency, depositors are given some relief.
Conclusion
Yes Bank is a bank that offers banking and financial services. Rana Kapoor and the late Ashok Kapoor founded Yes Bank Ltd.on November 21, 2003. Because Yes Bank was the largest private sector bank, the Yes Bank crisis caused widespread panic in March 2020. For a period of 30 days, the Reserve Bank of India took over the Yes Bank board of directors.”A brief history of Yes Bank” Yes Bank is a bank that offers banking and financial services. Rana Kapoor and the late Ashok Kapoor founded Yes Bank Ltd.on November 21, 2003. The bank received the Financial Express Awards for India’s Best Banks in 2006. Yes Bank was the first institution in the world to receive funding through IFC’s Managed Co-Lending Portfolio Program, and it was also the first Indian bank to raise a loan through IFC’s A/B loan facility.
