Yes Bank case study pptPresentation.pptx

Yes Bank case study to know about the case study of yes Bank with the help of RBI and other banks who invested in to it to get it on the track and to balancing out the situation. Here you can learn how the solved the situation to get out from the problematic situation and what measures should be taken

1. YES BANK

2. YES BANK CRISIS Yes Bank (India’s fifth largest private sector bank) has also come under the RBI action for mounting bad loans. In order to save Yes Bank from collapsing and to preserve people’s trust in the Indian banking system, RBI has taken several measures. the Yes Bank crisis in 2019-2020 stemmed from rising bad loans and poor management under CEO Rana Kapoor. The bank's financial health deteriorated, leading to a loss of investor confidence. In March 2020, the RBI imposed a moratorium, limiting withdrawals and superseding the bank's board. A rescue plan involved capital infusion by the State Bank of India and others. New leadership was appointed, stabilizing the bank and highlighting the need for better risk management in India's banking sector

3. Reasons for downfall of YES Bank When the bank reached its peak, it began lending billions to financially stressed companies like DHFL, IL&FS, Reliance, Zee, and Essel. These risky investments led to a temporary growth surge, despite UBS's warnings. Yes Bank couldn't manage its risky decisions, raising questions about its financial assistance to these companies. On March 5, 2020, after months of investigation, the Reserve Bank of India took control of Yes Bank's Board due to its severe financial deterioration. In March 2019, shortly after Ravneet Gill became head, the bank's non-performing assets (NPA) were at 8%, indicating a significant portion of bad loans, leading to a downgrade. This gave the picture that eight percent of all loans given out by Yes bank were Bad loans and hence they also downgraded them .

4. Steps Taken by RBI ? First, the Reserve Bank of India has taken over the YES Bank management. It has imposed a moratorium whose cash withdrawal limit has been capped at Rs 50,000. The RBI used the instrument of moral suasion on the SBI to acquire the Yes bank. The RBI announced a draft ‘Scheme of Reconstruction’ that entails the State Bank of India (SBI) investing capital to acquire a 49% stake in the restructured private lender. Along with this, HDFC and ICICI also invested ₹1000 crore each, Axis Bank invested 600 crores, Kotak Mahindra Bank invested 500 crores

5. Analysis of problems At its peak, investors grew suspicious of the bank's high numbers. By 2017, the RBI began monitoring governance issues and found Yes Bank was hiding NPAs. RBI caught this in 2015, 2016, and 2017, directing transparency. By September 2019, Yes Bank's bad loans were Rs 50,396 crores. With an 85% share downfall and money laundering accusations, Yes Bank's reputation plummeted. The bank reached the resolution stage without being under the RBI’s Prompt Corrective Action framework, raising questions about oversight

6. Effect of Yes bank Crisis Adverse impacts on the Banking sector. One, people will gravitate towards public sector banks which are already reluctant to provide credit. Two, private banks will be forced to offer higher deposit rates, keeping the cost of credit higher. Thereby banks will not be able to cater the credit requirement which is a prerequisite to realise the dream of becoming a $5 trillion economy by 2024- 2025

7. Effect of Yes bank Crisis Effect of Indian Economy: Collapse of Yes Bank is highly undesirable, at a juncture when the growth in the Indian economy has dropped to 5% Other- The government took over IL&FS in 2018 in an effort to reassure creditors after the defaults. Also, in 2019, the RBI seized control of another struggling shadow lender, Dewan Housing Finance Corp., to initiate bankruptcy proceedings. The Yes Bank crisis could trigger a domino effect that could lead to the collapse of various other financial institution. This revived the theory of.