YES Bank Live News: What's ahead for investors, depositors?

Shares of YES Bank cracked 40 per cent to their lowest in over a decade on Friday, after the Reserve Bank of India took control of the bank and limited withdrawals because of a serious deterioration in its financial position.

RBI, govt working together on resolution
FM Nirmala Sitharaman on Friday said that she was constantly in touch with the Reserve Bank of India (RBI) over YES Bank, assuring depositors of a quick resolution for the private lender. Sitharaman said she has personally monitored the situation for a couple of months now. The FM said the recent decisions taken were in everyone’s interest.

RBI will revive YES Bank swiftly: Das
With an objective to revive the beleaguered YES Bank, the Reserve Bank of India will come out with a scheme very shortly, assured Governor Shaktikanta Das on Friday. While addressing the media, Das said, “You will see swift action from RBI to put in place a scheme to revive YES Bank.”


Interest of YES Bank depositors will be protected: CEA
Chief Economic Advisor Krishnamurthy Subramanian on Friday said all options are under consideration for restructuring Yes Bank and assured that depositors' money is safe. His remarks come a day after the cash-starved lender was placed under a moratorium, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board with immediate effect. "The RBI has taken right steps. Yes Bank depositors' money is safe," he told reporters after meeting Finance Minister Nirmala Sitharaman.

Prashant Kumar takes charge as YES Bank administrator
YES Bank on Friday said Prashant Kumar, former deputy managing director and CFO of State Bank of India, has taken charge as its administrator. The private sector lender was on Thursday placed under a moratorium, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board. Kumar taking charge as the YES Bank administrator.

No Futures & Options in YES Bank
NEW DELHI: Leading stock exchanges BSE and the NSE on Friday said there will be no Futures and Options contract available in YES Bank for trading in equity derivative segment from May 29 onwards. The existing Futures and Options contracts across all expiries will expire on May 28. NSE has also put YES Bank’s derivative contracts in the ban period for Friday.

What are the current restrictions on YES Bank?
The RBI has put YES Bank under moratorium from 6pm March 5 till April 3, that means that there cannot be any legal action taken against the bank if any commitments goes unfulfilled during the said period. Second restriction is on payment to the depositors cannot be more than Rs 50,000 during the period until a written request for certain conditional payments not exceeding amount of Rs 5,00,000 is approved by the RBI administrator (Prashant Kumar) or a committee set up under him.

Digital partners hit by moratorium
After YES Bank was placed under moratorium, digital payments were impacted as PhonePe, which depends on the cash-strapped lender for its transactions, could not operate. It can be noted that the bank's own net banking facilities have not been operational since last evening. Other fintech operators who rely on YES Bank to settle their transactions are also down, PTI reported.

We sincerely regret the long outage. Our partner bank (YES Bank) was placed under moratorium by RBI. Entire team's been working all night to get services back up asap (as soon as possible),� the app's chief executive Sameer Nigam tweeted early in the morning.

AMCs swing into action to safeguard investors
Following the 30-day moratorium placed on Yes Bank, asset management companies have asked their clients, who have bank accounts with the troubled lender, to furnish details of alternate accounts for receiving redemption payouts. Redemption is the return of an investor's principal on a fixed income security such as a bond, mutual fund or preferred stock. The Reserve Bank's action came after the Rana Kapoor-promoted bank failed to raise capital to address potential loan losses.

What is problem and solution being worked?
The bank has been trying to raise capital since the new management took over and was successful in raising a first tranche funded by FII and DII but as the legacy issues were large and it had exposure to a lot of cases under IBC there was a need of larger provisioning resulting in need to large capital requirement. But last couple of tries were unsuccessful and as March 31 approaches there is an urgent need of capital as provisions will be higher in this quarter as per norms changes on default disclosures.

RBI in the release has mentioned that it is a temporary step taken to assure that there is no panic reaction from the depositors as that is the main raw material for the bank. It has also mentioned that it is working towards finding a solution either by reconstruction of operations or amalgamation with any other bank.

SBI has informed on Thursday in reply to clarification that it has received in-principle approval from board to explore investment opportunity in the bank.

Why it an important bank?
The bank as very significant systematic importance and high value deposits:

1. Total Deposits amount to Rs 2,09,947 crore (Decrease of 7-10% QoQ) of that Rs 39,600 cr is in Savings Account and CASA ratio is at 30.8 per cent.

2. Retail Term Deposits amount to Rs 61,700 crore that is 29.5 per cent of total term deposits and Corporate Term Deposits amount to Rs. 82,700cr.

3. In Terms of New Age Payment Systems:
a) Ranked 1st as Remitter Bank by NPCI under IMPS processing 60 mn transactions in Q2FY20.
b) Has 41 per cent market share by value in Aadhar Enable Payment System.
c) Has 39.7 per cent market share by volume in UPI transactions and is main merchant bank for PhonePe app.

Any similar event in Indian bank history?
Global Trade and Rajasthan Bank amalgamations were to due reasons where running independent operations was not viable and the bank it got merged were able to absorb the advance quality impact to major extent.

Recent PMC Bank withdrawal restrictions are also not comparable as there a fraud on a large scale that resulted in taking such an action. One major account that had defaulted was majority proportion of advances of the bank.

It is not comparable to fallout of IL&FS or DHFL as the operational closure did not have major impact on country rating.

This is a unique and first time situation that the banking system faces.

What investors’ should do?
“Do not panic as shareholder or depositor as the bank is very systematically important explained above. There would be regular communication by RBI and Government during the period to calm down the situation as it has other situations,” said Target Investing.

Would be best to hold your positions and not any new positions on anticipation of positive outcome, the brokerage house said.

(With inputs from Target Investing)

Contagion risk on India seen from govt’s move to seize Yes Bank

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India’s move to take control of beleaguered lender Yes Bank Ltd. could lead to a plunge in the riskier assets of Asia’s third-largest economy, according to analysts.

The rescue illustrates the widening damage from India’s shadow banking crisis, which has left the lender with a growing pile of bad loans. India benchmark Sensex Index dropped as much as 3.8% on Friday, set for its biggest fall since August 2015 while the rupee and the government bond yields also slumped. Shares in Yes Bank and State Bank of India Ltd. fell more than 10% each.

Here is what market watchers are saying:

India’s move to take control of beleaguered lender Yes Bank Ltd. could lead to a plunge in the riskier assets of Asia’s third-largest economy, according to analysts. The rescue illustrates ..

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“While RBI works on a rescue/revival package for Yes Bank, there could be uncertainty on liability inflows (deposits as well as bonds) for small/mid-sized banks as well as NBFCs.”
“Fast clarity on the plan of reconstruction/amalgamation is critical from a system perspective.”

“While RBI works on a rescue/revival package for Yes Bank, there could be uncertainty on liability inflows (deposits as well as bonds) for small/mid-sized banks as well as NBFCs.” “Fast clarity on th..

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Yes Bank’s seizure by the government is coming “at a time when India’s slowing economy is faced with issues of coronavirus.”

“The effect of Yes Bank’s collapse will be felt across all markets with Sensex, Nifty falling sharply, rupee weakening and credit markets becoming more frozen and illiquid. There could be a flight to safety to government bonds.”

Yes Bank’s seizure by the government is coming “at a time when India’s slowing economy is faced with issues of coronavirus.” “The effect of Yes Bank’s collapse will be felt across all markets with S..

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“Yes Bank’s shares are likely to crash today. It being put on moratorium signals more worries around its asset quality.”

“SBI shareholders may not lose much because I don’t think SBI alone will take the burden. The takeover offer can at best happen only at the face value of Yes Bank.”

“GTB was the similar case in 2000s. GTB was acquired at almost nil value by OBC. Shareholders of GTB got nothing at that time.”

“There will be new infusion of capital needed to avoid asset-liability mismatch.”

“Yes Bank’s shares are likely to crash today. It being put on moratorium signals more worries around its asset quality.” “SBI shareholders may not lose much because I don’t think SBI alone will take..

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“While asset side problems of Yes Bank were largely anticipated we believe this development takes markets by shock.”

“With asset base of INR 3.47 trn, Yes Bank is a sizeable player in the banking system and a freeze on entity of such size could disrupt smooth function of the financial markets without strong regulatory intervention.”

Could see a flight to safety of deposits from smaller/mid-size banks to larger and more stable banks.

“While asset side problems of Yes Bank were largely anticipated we believe this development takes markets by shock.” “With asset base of INR 3.47 trn, Yes Bank is a sizeable player in the banking sy..

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“The contours of the restructuring/amalgamation scheme remain largely unknown at the current juncture.”
“The development is negative for the stock given that the new capital is likely to come at a steep discount.”

“The contours of the restructuring/amalgamation scheme remain largely unknown at the current juncture.” “The development is negative for the stock given that the new capital is likely to come at a st..

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