Prestige Institute of Management and Research

(An Autonomous Institution Established in 1994, Accredited with grade ‘A++’ NACC (UGC) ISO
9001:2008Certified Institute, AICTE / UGC Approved Programs Affiliated to DAVV, Indore)

(Batch 2021-2023)

Effects of Bad Corporate Governance

on
Companies Performance and Economic Growth

Submitted To: Submitted By:

Dr. CS Pratima Jain Nandini Mahajan
Rushali Parmar
Shubham Jha
Yash Guldasani
Yuvraj Singh

MBA FA A III

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 BAD CORPORATE GOVERNANCE

Yes Bank

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Introduction

YES BANK is a 'Full-Service Commercial 'Bank' providing a complete range of products,

services and technology driven digital offerings, catering to Retail, MSME as well as corporate
clients.

YES BANK operates its Investment banking, Merchant banking & Brokerage businesses
through YES SECURITIES, a wholly owned subsidiary of the Bank. Headquartered in
Mumbai, it has a pan-India presence.

YES BANK, was the India’s fourth largest private sector bank, a high quality, customer centric,
service driven, private Indian Bank catering to the Future Businesses in India. It offers wide
range of differentiated products for corporate and retail customers through retail banking and
asset management services etc.

YES Bank was considered among the fastest growing private banks in its nascent career, which
started in 2004, with the prior approval of the RBI. Mr Rana Kapoor, Mr Ashok Kapur and Mr
Harkirat Singh were the trio who led the way for its existence. Mr Ashok Kapur and Mr
Harkirat Singh were the other two colleagues, who helped him in setting up Rabo India Finance
in 1998 (Karnik, 2017b). In 2003, all three partners applied for a license to start YES Bank in
India, which got issued in 2004. The year 2005 marked the first initial public offering (IPO)
listing of the shares to the general public, and YES Bank was set up with a start-up capital of
₹2,000 million.

Type: Public

Industry: Banking, Financial services [1]

Founded: 2004; 18 years ago

Founder: Rana Kapoor

Ashok Kapur

Headquarter: Mumbai, Maharashtra, India

Key people: Sunil Mehta (Chairman)

Prashant Kumar (MD & CEO)

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Products And Services

 Digital Salary Account

 Savings Account
 Current Account
 Fixed Deposits
 Recurring Deposits
 Online Banking
 Net Banking Services
 Credit Card
 Credit Card Services
 Debit Card
 Special Loan for Covid affected Tourism Service Sector
 Corporate Loans
 Commercial Vehicle Loan
 Construction Equipment Loan
 Home Loan
 Affordable Housing Loan
 Education Loan
 Personal Loan
 Loan in Seconds
 Bike Loan
 Car Loan
 Inventory Finance
 Gold Loan
 Loan Against Property
 Loan Against Securities
 Business Loan
 Healthcare Finance
 Business Equipment Finance
 Online Loan Payments
 Credit Card Bill Payment
 Insurance Claim Intimation

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Timeline of Yes Bank

2004

Promoters, the Promoter Group Companies and the Private Equity

Investors agreeing to be bound by the terms of the MIA, in so far as they relate to any right,
obligation or duty upon us.

RBI by their letter dated February 26, 2004 has also provided their no-objection to the
participation of the three private equity investors
namely Citicorp International Finance Corporation, Chrys Capital II, LLC and AIF Capital
Inc. in the equity of the Bank at 10%, 7.5% and 7.5%, respectively.

2005

- YES Bank on May 12, 2005, forays into retail banking with launch of International Gold
andSilver debit card in partnership with MasterCard International.

-YES Bank has announced that it will enter the capital market with its initial public offer on
June 15 to raise Rs 266-315 crore. The issue will close on June 21. YES Bank will offer
sevencrore equity shares of Rs 10 face value through a 100 per cent book building route. The
price band for the shares has been fixed at Rs 38-45.

2006

-YES Bank Launches YES MICROFINANCE

-YES Bank join hands with Reuters

2007

-YES BANK received the Euromoney - Trade Finance ‘Deal of The Year’ award for a
structured & innovative Rural Financing solution in providing loans to over 2000 nomadic
honey bee farmers in Jammu & Kashmir. The only Indian private sector Bank to have won this
award as the lead arranger out of a total of 367 deals presented across 30 countries.

2008

- YES Bank Limited has appointed Ms. Radha Singh and Mr. Ajay Vohra as Independent
Director(s) on the Board of Yes Bank w.e.f. April 29, 2008.
- YES Bank and PTC+, a premier Dutch practical training institution in the field of high
technology agriculture have announced an alliance to develop projects and encourage
innovations in the Agri sector and other initiatives in the field of Agri-infrastructure.

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2009

- SKS Microfinance seems to have signed a securitisation deal worth Rs 100 crore with YES
Bank. This deal would allow the bank to purchase 1,48,950 micro loans extended to unbanked
SC as well as ST and minorities' families identified by the Reserve Bank of India as weaker
sections. The transaction has been rated as `Very Strong Safety' by CRISIL.

-YES BANK was awarded the 'Most Innovative Bank in India' at the New Economy First
Annual Banking and Finance Awards 2008 held in London and were announced in the
December 2008 issue of the International Magazine, New Economy. YES BANK is the only
Indian Bank to have won this award.

2010

- YES Bank has joined hands with handset maker Nokia to offer mobile payment services that
will enable consumers pay for goods and services using their mobile devices.
-YES Bank raises USD 225 million (Rs. 1033.87 crores) through a Qualified
InstitutionsPlacement
-YES BANK commences operations in Assam
- YES BANK receives Baa3 Long Term International Rating from Moody's

2011

- YES Bank enters into a strategic alliance with Dewan Housing Finance Corporation Limited
(DHFL)
- Yes Bank hikes saving deposit rate from 6% to 7%
- YES BANK recognized as "India’s Fastest Growing Bank of the Year" at the Bloomberg
UTV Financial Leadership Awards 2011

2012

-YES Bank has launched Auto Credit Service to boost its low-cost deposits and attract retail
customers
- YES Bank gets RBI nod for broking subsidiary
- YES BANK awarded ‘The Financial Insights Innovation Award at the Asian Financial
Services Congress, Singapore

2013

-YES Bank joins IPL with 5-year sponsorship deal

-CCEA approves Yes Bank’s proposal to raise foreign holdings to 60%
-YES Bank to appoint 3 top management executives as whole-time

directors2014

-YES BANK receives Ratings Upgrade from ICRA on its various Debt Programmes"
-YES Bank receives ratings upgrade from ICRA
-YES Bank signs MoU with TERI to promote sustainable development in India

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2015

-YES Bank has set up a representative office in Abu Dhabi, UAE

-YES BANK becomes the first Indian bank to be selected in Dow Tones Sustainability Indices
-YES BANK and London Stock Exchange Group Sign MoU

2016

-YES Bank Ltd has Acquisition of stake in IiAS

-YES Bank's FIIs/ RFPIs limit increased to 60% from 49%

2017

- "YES BANK partners with Gupshup to introduce AI powered Chatbots for instant loan
offering"
- YES Bank Ltd launches first-in-industry Customizable Savings Account
- YES Bank awarded for 'API Banking' Innovation at Fintec India Conference & Awards

Management:

Board of Directors:

 Mr. Rama Subramaniam Gandhi

 Ms. Rekha Murthy
 Mr. Sharad Sharma
 Mr. Sadashiv Srinivas Rao

Committees:

 Audit Committee
 IT Strategy Committee
 Customer Service Committee
 Stakeholders Relationship Committee
 Capital Raising Committee
 Risk Management Committee
 Fraud, Wilful Defaulters and Non-cooperative borrowers monitoring committee
 Board Credit Committee
 Nomination and Remuneration Committee

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Impact On Different Stakeholders and Regulatory

 In march 2019, Ravneet Gill the new CEO of the bank, but the problems had grown
so much that the YES bank its first ever quarterly loss in April 2019, after which their
stock fell by 30% the next day, which has affected the wealth of its stakeholders.

 The Non-Performing loans ratio of the Yes Bank reached to 8%.

 The Yes Bank crisis has sent a panic wave across domestic markets and households
where individuals have accounts with the bank. The government has assured all the
account holders and stake holders that there is no need to panic as Reserve Bank of
India will come out with a resolution plan for the bank's recovery.

 Other stakeholders like Yes Bank's own employees and corporate clients are also
affected but there was no way to quantify the impact before RBI has announced its
resolution plan. In case of a merger with another bank, some employees of Yes Bank
has faced the axe as has been witnessed in the case of past emergency mergers.

 The economists and brokerages agree with RBI's move, limitations on withdrawals,
transactions could have significant consequences.

 Finance Minister Nirmala Sitharaman has also assured depositors' their money is safe
and there is no need to panic and to stakeholders also but there was a period of
immediate chaos due to curbs on deposits and withdrawals.

Remedial Actions Taken by Reserve Bank of India

 On 5th march, 2020 the RBI took up the entire matter into its hands and declared the
moratorium.

 The State Bank of India has acquired Yes Bank, after the resolution plan was finalised
by the central bank.

 Since RBI has capped withdrawal limit at Rs 50,000 per account holder depositors
were already in a panic situation about how to withdraw money or pay EMIs linked to
their bank account. While daily banking services were not affected, the critical issue
was the cap on withdrawals.

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  This has created issues for individuals who have multiple EMIs linked with a Yes
Bank account. Emergency cheque clearances above Rs 50,000 will also not be
allowed. It was worth mentioning that if the person has more than one deposit account
with the bank, the limit of Rs 50,000 will apply cumulatively to all accounts.

 Customers were only allowed to withdraw Rs 5 lakh in certain cases - medical

emergencies, marriages and payment for higher foreign education - on approval from
the central bank.

Current Situation of Yes Bank

 Yes Bank is showing remarkable progress, it would take around 1-2 more years to
stabilise said by the former SBI chief. Crisis-hit YES Bank has shown remarkable
progress after its management was taken by the clutch of investors led by State
Bank of India (SBI) and may take 1-2 more years to stabilise, said former SBI
chairman Rajnish Kumar.

 Slippages at Rs 5,795 crore as of March 2022, halved from Rs 12,035 crore at the
end of March 2021.

 The Share Price of Yes Bank as on 2, November, 2022 is Rs 15.50.

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 The 52 Week High of Yes Bank Share price is Rs 18.20 and 52 Week Low of Yes
Bank Share price is Rs 12.10.

 According to the news report, Yes Bank will transfer Rs 48000 crore of stressed
loan to Asset Reconstruction company JC FLOWERS by the end of November.
Along with this the bank is planning to invest Rs 350 crore in the same
reconstruction company.

 Also according to news report, Yes bank is also planning to sell all its Non-
Performing Asset to JC FLOWERS by December.

 Following the revision, Yes Bank is offering a maximum interest rate of 6.25% on
savings accounts and on fixed deposits, the maximum that will now be provided
will be 6.75% for the general public and 7.50% for senior citizens on deposits
maturing in 36 months to 120 months.

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References:

https://www.yesbank.in

YES Bank annual report

https://en.wikipedia.org/wiki/Yes_Bank

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