TERM ASSIGNMENT

Banking operations and credit analysis

POST GRADUATE DIPLOMA IN MANAGEMENT

(Term-IV; Batch 2019-21)

Under the Guidance Of

Prof. AK PURI

Submitted By

Name: RUCHIKA SINGH

Roll No. PGFC1955

“JAIPURIA INSTITUTE OF MANAGEMENT”

“A-32 A, SECTOR-62, Institutional Area,”

“Noida- 201309 (U.P.)”

BANKING SECTOR INDIA
The banking sector is undergoing drastic transformation. The changes include changes to
business models, new technologies, fintech platforms and enforcement pressures. The
emergence of non-bank start-ups, also called fintechs, changes the competitive environment
of the banking industry. Traditional institutions were forced to reorganise their way of doing
business.

As breaches of information become more common and privacy issues increase, as a result,
enforcement and regulatory needs are more limited. The specifications of that client have
been changing on top of that. Many customers are trying to be met with customised services
round-the-clock. So, here are the challenges facing the banking industry.

ISSUES AND CHALLENGES OF BANKING SECTOR OF INDIA

1. Customers of financial services expect relevant and personalised experiences on any
computer, anywhere, and at any time through intuitive and simple interfaces.
Customer loyalty easily becomes a threatened notion. It is a product generated by
robust relationships which first understand the customer and his expectations.
Knowing the customer well and engaging him would then reduce customer material.
Financial organisations also can use the Bots, an effective and versatile tool offering
superior customer service. Bots will contribute at no cost to enhancing consumer
engagement.

2. The financial sector faces risks that threaten the services' most critical areas. These
risks prompted many financial institutions, as a stop-gap precaution, to seek alliances.
Credit unions and conventional banks must develop significant steps to address the
challenge to their operation in order to maintain a competitive advantage.

3. All this puts strain on conventional sources' financial profitability through the high
cost of capital, integrated with low interest rates, reduced ownership trading, and a
declining return on equity. However, the prospects for shareholders remain
unchanged. These trends have prompted many institutions to create new service
offerings, to undertake sustainable operational productivity advances and to
streamline business lines in order to preserve revenues. It is not a choice to fail to
respond to changing demands. This implies that banks must be organised and, where
possible, prepared to pivot.

4. This has been motivated by the sharp rise in regulatory fees. Compliance with
different regulations will make financial institutions significantly stressed by resource
selection. Similarly, banks are met with expensive repercussions when they fail to
obey the regulations. They face additional risks and costs to keep the new regulatory
amendments current.
ABOUT YES BANK-
Yes Bank, incorporated in 2004 by Rana Kapoor and Late Ashok Kapur, is a new age private
sector bank. Since inception Yes Bank has fructified into a ‘“Full Service Commercial Bank”
that has steadily built Corporate and Institutional Banking, Financial Markets, Investment
Banking, Corporate Finance, Branch Banking, Business and Transaction Banking, and
Wealth Management business lines across the country, and is well equipped to offer a range
of products and services to corporate and retail customers.

On 5 March 2020, the Reserve Bank of India (RBI) announced taking control of Yes Bank in
an attempt to avoid the collapse of the bank. Although the stock crash may come as a surprise
to many, there seem to evidently be many red flags placed by Yes Bank on the road to this
date – 5th March 2020.

For this yes bank has to face new challenges as it gears up for business after spending the last
year looking for capital.

ISSUES AND CHALLENGES FACED BY YES BANK

1. RETAINING DEPOSITS:
The bank has confirmed that only a third of its clients have withdrawn Rs 50,000 from
the bank's moratorium, assured that no deposit rush will take place.

2. RECOVERY OF BAD LOANS:

In the coming financial year YES Bank hopes to recover approximately Rs 8,500
crore from its loan defaults, primarily corporations. Rs 34,000 crore loans to top
defaulting firms, including Anil Ambani Group, Essel and DHFL are the bank's
performance properties. Rs 12,800 loans issued to companies within Anil Ambani
Group turned into non-performing assets, while the Rs 8,400 crore worth of the Yes
Bank's NPAs represented 16 companies belonging to Subhash Chandra's Essel Group.

3. CONTAINING SLIPPAGES:
Yes Bank plans to increase the slippage level in 2020-21 to 5% from 11.98% in 2012-
12. "There is very conservative five per cent slippage ratio. This would involve about
slippage of Rs. 8,500.

4. EMPLOYEE MORALE:
The morale of the private sector bank workers is already poor and will possibly be
further impacted by the new PSU management. In addition, the Yes Bank wages are
much more than the SBI counterparts draw.