CASE STUDY OF YES BANK

Introduction:
Yes bank is an Indian private bank started its journey in 2004. It is one of the new generation
private sector banks that were allowed to start banking operations by Reserve Bank of India in
the post-liberalization era. It was formed under the leadership of Rana Kapoor and Ashok
Kapoor.
This study traces out the genesis of Yes bank Crises and the reasons for downfall of a major
Indian Bank. Since its inception, YES BANK has adopted international best practices, with the
highest standards of service quality and operational excellence. 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.
Reasons for downfall of YES Bank:
But, as soon as the bank reached its peak of success, the bank (owing to the overwhelming
response they received) started lending billions to companies. A lot of questions were raised as
to why the financial assistance was given to these companies. After months of investigation, on
March 5 2020, the Reserve Bank of India announced the order to it supersedes the Yes Bank
Board of Directors for a period of 30 days “owing to serious deterioration in the financial
position of the Bank”. Within a month of Ravneet Gill taking over as head of Yes Bank on
March 2019 it was estimated that their NPA was standing at 8%. This gave the picture that eight
percent of all loans given out by Yes bank were Bad loans and hence they also downgraded
them.
Following the reasons that led to failure of yes bank:
1. 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. Outstanding loans of YES bank grew from INR 55,000 crore in FY14
to INR 2.41 trillion in FY19.
2. Manipulated NPA:

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3. Low PCR:

4. High CDR

5. Poor Profitability:

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6. Founders Dumping stock: In January 2019 Yes Bank announced that Rana Kapoor would
step down from his CEO position due to restrictions placed by the RBI over the extension
of his tenure. This was also followed by Kapoor along with other investors dumping their
stake from Yes Bank in November 2019 which also led to a severe fall in the stock prices.
Negative ratings of rating agencies, the UBS report, RBI’s correcting measures on the
bank for under-reporting NPAs, and finally the moratorium imposed led to panic among
the depositors and the shareholders which triggered them to withdraw their investments
and sell the stocks respectively

7. Fall in Stock Prices:

8. Government Issues: The bank has also experienced serious governance issues and
practices in the recent years which have led to steady decline of the bank as announced by
RBI. On 5th March 2020 RBI put YES bank under moratorium. With this regulation, the
people having accounts with the bank could withdraw only INR 50,000 and this continued
till 3rd April 2020. RBI first tried to control the current situation rather than waste time on
finding possible solutions.

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