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  • Writer's pictureLAWGIC STRATUM


Author: Shriya Bhatkhande

Fraud and deceit have been practiced since the beginning of history… Brass has been called gold; glass has been sold as diamonds, and poison has been hawked as excellent food. The story of fraud throughout the ages forms an ugly chapter of human history.” - John Andreas Widtsoe


Ashok Kapur, Harkirat Singh, and Rana Kapoor launched a bank called YES bank in 2004, which came out to be the giant private sector bank in India. The setup was a customer-focused and service-oriented Indian bank for the prospective corporates of the country. Its IPO was released and kept proceeding until the global monetary crisis of 2008.[1] Ashok Kapur, unfortunately, expired in the 2008 terrorist attack in Mumbai whereas Harkirat Singh took an exit from the bank at a very introductory period saying, This decision is further evidence of a lack of mutuality of the objectives of the bank as envisioned by me.. Yet, to attain success the bank started contentiously concentrating on its functioning.[2]

The Rising of Yes Bank

A bunch of firms counted on private banks for their capital and YES Bank got attention. They amassed countless clients. Amongst these, few had a banking partnership with YES Bank for UPI transactions viz. Flipkart, PhonePe, Swiggy, etc. As the bank prospered, people started investing on a large scale, and soon this profit raised to 2 lakh crores for the bank. YES Bank earned the highest confidence among clients with massive success.[3]

The Failure

However, as they say, it is only when everything is noticing alright that's when things go wrong. As soon as the bank hit its point of accomplishment with astounding feedback, they started lending billions to businesses. However, some of their clients viz. Dewan Housing Finance Corp. Ltd (DHFL), Anil Ambani’s Reliance group, etc. were already facing financial burden.[4] Instantly, this drove to humongous trouble as these businesses really had no way to refund their debts back to the bank and were no way safe investments. A lot many questions were lifted as to why the financial service was given to these businesses, were the correct probabilities established?


All of these issues led to a massive problem. Indebtedness of YES bank raised from INR 55,000 crore in the Financial year 2014 to INR 2.41 trillion in the Financial year 2019. UBS, a global financial services company raised bearings about the credit trait of the YES bank.[5] They issued a word disclosing the growth in Non-performing assets (NPAs) of the bank. Despite seeing the financial incompetence of current borrowers, the bank granted more money to them which ultimately proved to be the NPAs for the bank. It will have an impact on customers whose salary accounts are linked to Yes Bank.[6]

On 5th March 2020 RBI put YES bank under embargo. With this regulation, the people having accounts with the bank could withdraw only INR 50,000 and this went on till 3rd April 2020. Adverse ratings of rating bureaus, the UBS summary, RBI’s amends on the bank for confidential NPAs, and finally the freeze levied created a stampede amid the shareholders and bank customers; provoking in the withdrawal of their financings and selling the stocks. The faith of people and the share price collapsed. The share price descended from INR 1400/share to a mere INR 5/share in the early 2020s. Additionally, Rana Kapoor got arrested under (section 3) Prevention of Money-Laundering Act, 2002 by the Enforcement Directorate (ED).[7]

The Redemption Plan

The ongoing rescue plan designed by the government came up with a draft plan where SBI has to buy a 49% stake and bear in the necessary finance. ICICI bank took a 7.97% stake in YES bank. The enduing bank will not undermine its equity in the new bank under 26% before the completion of 3 years. All the employees will linger to work at the same pay for at least a year. AT1 bonds costing INR 10,800 crore to be obliterated which will return capital in the bank but leave the clients with a great debt. RBI convened INR 60 thousand crores as an emergency credit line for the bank.[8]


Undeniably, the present economic condition ought to COVID-19 is going to be troublesome for the bank to rebound for a while. YES Bank crisis is the 1st ever incident in India that wiped out AT1 bonds delivered to investors worth INR 8,415Cr. This was the 2nd banking mess reported in the country, after PMC bank’s crisis.

Also Read: [1]Global Financial Crisis of 2008 [2]Yes Bank Company History Information [3]Unified Payment Interface in Yes Bank [4]Dewan Housing Finance Corporation Crisis [5]UBS-Yes Bank Report [6]Non-Performing Assets of Yes Bank [7]Enforcement Directorate (ED) [8] Additional Tier-1 bonds

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