Knowledge Castle

Yes Bank Crisis Explained 

So you already know that Yes Bank is in news now a days because it is facing some crisis and depositors of this bank also facing lots of problems as RBI put a restriction on withdrawl of money. It means a person can't withdraw his own money from his own account. Now question arise How this crisis rises in Yes bank. In this article we will read about Yes bank History and the reason behind its crisis.

History of Yes bank

Few years ago Yes bank is the  6th Largest private bank of India but recently its share  92% down and Yes bank is facing some crisis. This bank stared by Rana Kapoor,Harkirat Singh, Ashok Kapur in 1998 with the partnership of RaboBank and this partnership named as "Rabo India Finance" . Later in 2003 this partnership were demolished and Rana Kapoor, Harkirat Singh, Ashok kapur sold their stakes because they want to set up "Yes Bank". In 2004 they got License of Yes bank. After some days Harkirat singh left the yes bank and all the control were come under Rana Kapoor (CEO) and Ashok Kapur (Chairman) and they ran the Yes bank smoothly up to 2008. But in 2008 when there was attack on Mumbai named as 26/11 mr Ashok Kapur died in this attack. After the death of Ashok Kapur all the control came in hands of Rana kapur and the stake of Ashok Kapur filled by Ashok kapur's wife Madhu Kapur. Later Rana Kapoor cut the madhu Kapur from the bank's process and also cut her name from the list of major shareholder's list. Even when she elect any kind of board of director then Rana kapur also neglect that board of director due to this Madhu Kapur had limited control over bank's operations. From the period of 2008 to 2018 the yes bank made nice profits. But behind these profit there is lots of facts were hidden which comes in light later.

Reason Behind The Crisis

You see banking sector works differently than other industries. ere profit comes before and Losses comes after. Here first this industry rise and then fall because of lots of hidden facts and information .Rana Kapoor was very aggressive towards his work. They even gave loan to those company facing problems in economy and he make sure that the loan amount must be recovered back in time. Due to this aggressiveness Yes bank was earning 35% growth annually from 2008 to 2018. But later in 2018 RBI came to know that Yes Bank hiding his Non Performing Assets (NPA). So RBI demand NPA eport from Yes Bank and RBI founds that Yes bank's Actual NPA is greater than the Actual NPA that Yes bank Showing in Reports. So RBI appoints  Mr. R Gandhi as additional director on Boards of Yes Bank and also restriction on extension of Rana Kapoor for the position of CEO.

The Second reason of Yes Bank failure is NPA. Yes bank followed aggressive policy to gave loans to Other companies and in future these loans converted into NPA due to this bank has to face major loss in their operations. Yes bank gave major loans to Essel Group, DHFL, Anil Ambani's Comapnies , Coffee Day Enterprises and all these loans  become NPA and bank's losses began to rise.  In Financial year 2020 NPA of Yes Bank rises from  1.6% to 7.39 %.

Current Condition of Yes Bank

Recently Rana kapoor sold his stake and keep only 900 share with himself.Ar present Mr. Ravneet gill is CEO of Yes bank and trying to turn around the losses of Yes bank. Currently Yes bank has more that 1 lakh Crore debt on their shoulder. So Increasing NPA, losses and Lack of Funds for business operation are the main challenges that bank facing. they even planning to raise 2 billion Funding to keep the bank on track. But since NPA is increasing the depositor's money is at risk in bank. it means if bank become bankrupt then people may lost their deposited amount.

So this all about Yes bank Crisis. If you have any queries regarding this article then you can let us know in comment section.