Rs 592 crore out of the Jagannath Temple’s Rs 626.44 crore savings, had been kept with Yes Bank. Later the temple administration withdrew Rs 47 crore that was in a flexi account. According to media reports, Yes Bank had committed to returning these funds in three tranches on March 19, March 23 and March 29. Questions had then been raised about the Sri Jagannath Temple Administration’s decision to park so much of the temple’s funds in a private bank instead of a nationalised bank. The country’s richest temple Tirumala Tirupati had withdrawn Rs 1,300 crore held at Yes Bank in October last year, Tirumala Tirupati Devasthanams, which manages the affairs of the temple, said on Friday.The finance officer in TTD would have been monitoring their investments.
Our HM and present Minister's appear to love chronology, and here it goes:
Yes Bank has co-Rana virus.
The story of Yes Bank goes thus: Yes Bank was founded by Rana Kapoor and Ashok Kapur in 2004 after they acquired a banking license from RBI as a Private bank. Rana Kapoor, a former successful and progressive Bank of America executive for almost 16 years, who then joined ANZ Grindlays Investment Bank (ANZIB) as general manager & country head for two years, until 1998. Around the same time, they set up Rabo India Finance, a non-banking finance company, with the help of Rabo Bank (is a Dutch multinational banking and financial services company headquartered in Utrecht, Netherlands) in 1997-98, along with his partners Harkirat Singh and Ashok Kapur. Rana Kapoor was Ashok Kapur’s brother-in-law. In 2003, the team was granted a banking licence by the Reserve Bank of India (RBI) to set up Yes Bank. They established Yes Bank with the vision of "Building the Best Quality Bank of the world in India" by 2015. Rana Kapoor held 26% stake in Yes Bank, Ashok Kapur held 11%, and Rabobank International held 20% stake. While the bank was run by both of them with Ashok as the Chairman and Rana as the CEO and MD, Ashok lost his life in the 26/11 Mumbai terrorist attacks in 2008, leaving Rana Kapoor as the sole head of the bank.
( https://www.telegraphindia.com/business/yes-bank-loses-its-chairman/cid/523263 ) YES Bank’s MD and CEO Rana Kapoor and the late Kapur’s family have been at loggerheads for years over the rights of the legal heir to nominate directors to the board jointly as per the articles of association formed at the time of founding the bank. Madhu Kapur and her daughter had petitioned the Bombay High Court in 2013 about their lack of say in the appointment of directors and wanted the court to uphold their right to jointly nominate directors.Ms Kapur also wanted YES Bank board to accept the nomination of Shagun Gogia to the board but this was rejected by the bank, citing her lack of qualifications. "The crux of the issue is a complete disregard for the Articles of Association and the complete lack of an institutional and personal response from YES Bank and Rana Kapoor to our concerns over many years which led us to have to take the legal route," Shagun Gogia, daughter of Plaintiff Madhu Kapur said in a statement. "We have fought the case on the matter of principle as after my father’s demise there was a systematic attempt to deprive us, his successors, from his legitimate rights. Whilst we are not denying the success of the bank, the issue rights is a complete distinct issue." It had fights at different level, including on the term relative.
Read more at:
https://economictimes.indiatimes.com/industry/banking/finance/banking/rana-kapoor-loses-battle-to-sister-in-law-bombay-hc-says-madhu-kapur-has-right-to-nominate-directors/articleshow/47712916.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
The number of Branches and ATMs that the bank had as of 2019 are 1,122 branches and 1,220 ATMs (June 2019) with a Revenue of ₹25,491 crore (2018); Total assets of ₹301,390 crore (2018) and Net income: ₹-1,506.64 crore (2019). They had an excellent and quick customer service and credit card policy as well.
Around 2016, the RBI began scrutinising banks to ensure they were not under-reporting bad loans on their books. RBI then asked banks to start submitting reports on companies it borrowed to with an exposure higher than Rs 5 crore. This is where Yes Bank’s skeletons came tumbling out, Rana Kapoor's claims of the bank’s stellar performance started to come under a cloud. In 2018, after Rana Kapoor's re-appointment as MD and CEO was approved for three years, RBI cut his term short till January 31, 2019. This was reportedly because RBI was concerned about Rana Kapoor’s approach that led to the bank having massive bad loans. YES BANK has won multiple awards at The Asian Banker’s Choice and Asian Banker Transaction Awards 2019 programme held in Thailand. But it was also the beginning of the downfall of Yes Bank’s stock as well. Even as the board sought to extend his term, RBI refused, raising suspicions of corporate governance issues at the bank. The bank also saw rating agencies then consistently downgrading Yes Bank’s rating amid a series of exits from the board of the company. This was also followed by a series of fines slapped on Yes Bank by RBI on account of non-compliance for violating money transfer terms.In March 2019, Ranveet Gill was appointed as the MD and CEO of Yes Bank. He now had the responsbility of turning around the bank’s books and rehaul operations. But Ranveet had a mammoth task ahead of him. In Q4 of FY19, Yes Bank registered a loss of Rs 1,506 crore. Rana Kapoor sold part of his direct stake in the bank in September and as of October 2019, had less than 1% stake left in the bank he founded. He sold his stake mainly to repay debts taken by the promoter group. In January 2020, Rana, his family run firms -- Yes Capital (India) and Morgan Credits – exited the bank as well. With this, they also lost any control over the bank and all voting rights. Yes Bank told the stock exchanges on January 9, 2020 that Rana and Yes Capital had no more stake in the bank at the end of December 2019. What followed was the bank’s desperate attempts to raise funds. From Microsoft to some private equity investors, there were several reports of interested parties. Yes Bank’s deteriorating financial position and corporate governance issues didn’t help the search either. On Thursday, RBI said that it has been in constant engagement with the bank’s management to find ways of strengthening its balance sheet and liquidity.And while the management of Yes Bank told RBI that it was in talks with various investors, no deal materialised. But the whole time, there was no clear plan for the revival of the bank. And that was what led to RBI to apply to the Central Government for imposing a moratorium under section 45 of the Banking Regulation Act, 1949.
“No Yes Bank. Modi and his ideas have destroyed India’s economy,” Rahul Gandhi tweeted, once yes bank became No bank overnight. Is this inability of Yes bank or government, such things are coming up one by one? Congress, BJP trade barbs over Yes Bank crisis. Amit Malviya BJP's information and technology wing in-charge says Gandhi family had 'deep links' with every financial crime, Congress questions Modi, Sitharaman's role in bank crisis. Sampath Patra is busy pointing out the 2 crore sale, of Rajiv portrait; is that the biggest issue?
Finance Minister wanted to place on record in a press meet, that: - since 2017 RBI was continuously, closely monitoring; May 2019 onwards, Government has been monitoring as well. Major mile stones are they were aware of the culture of weak governance, wrong asset classification with risky credit distribution. So RBI had taken some crucial actions, like in September 2018 they asked the Governance to change, a New CEO was appointed. Also, the cleaning up of the bank commenced from then. Promoter was asked to let go of his share; investigative agencies also kept an eye on the bank (and interesting inspite of this loans kept going higher) In March 2019 new CEO started working closely with RBI - One crore rupee fine was imposed in sometimes March 2019; and SEBI from September 2019 kept an eye on the insider trading; and May 2019 for Non compliance by RBI. New CFO was appointed, and September 2019 all stakes were sold by earlier promoters. Genuine attempts were made to infuse more capital to restore the length, and therefore space and margin was given, three times. In Nov. 2019 it was clear that there were no hopes and chairman of Audit committee resigned in January 2020. Last six months, day to day monitoring was done. FM has asked RBI to access where the problem lies, and identify, the roles played by various people in creating and addressing the problem. Adequacy of the regulatory and supervisory norms and if inadequate, where and why. Due process of law was set in actions. RBI 's steps included
1) Moratorium in place.
2) Capping withdrawal limit
3) Supersision of board
4) Former CFO of SBI appointed
5) Put in place scheme for restructure the bank within 30 days.
6) SBI has expressed interested in investing in Yes Board
7) Administrator will help put a new board in place
8) Deposits and liabilities will continue unaffected as before.
9) Employment and salary assured at least for one year.
Exposure by bank has been since before 2014. Indian banking system had severe challenges between 2004 and 2014. “Not that I want to put a blame on them, but I have reason to do so,” Nirmala Sitharaman told reporters. (Old habit's die hard!) Her response to economic problems has also become a highly repulsive cliché. According to her, the Indian banking sector had faced ‘several challenges’ because of the way the previous Congress-led government had handled matters in the 10 years it ruled between 2004 and 2014. The list of defaulters includes Anil Ambani’s Reliance Group, IL&FS, DHFL, Vodafone, from prior to 2014; Sitharaman slammed the Congress government and its “self-appointed competent doctors” for precipitating a crisis at three banks: Global Trust Bank was merged with the Oriental Bank of Commerce in 2004, United Western Bank was taken over by the IDBI in 2006, while Ganesh Bank was merged with a private bank (Federal Bank in 2006), she said. “In all three banks, you merged them and washed your hands of (them),” she said. She reiterated, she and her government would not let apex institution collapse, and how the deposit insurance was increased from one lakh to 5 lakh.
According to an Outlook Business report, in FY16, Yes Bank’s NPAs were at over Rs 4,900 crore, while it had reported an official number of only Rs 749 crore. Wilful Defaulter Of Yes Bank , All These Loans Were Advance By Government after 2014 With lime light given to other social areas. Adani Group : 14,370 Crores; Ambani Group : 14,330 Crores ; Vedanta Group : 11,000 Crores ; Essel Group : 3,300 Crores . Stress and media news keep repeating DHFL - Dewan housing Finance corporation. Connection with Iqbal Mirchi. The defaulters also includes Jet Airways, Essar Shipping, Cox & Kings, Café Coffee Day, among others.Result: Even Modi Bhakts can withdraw only Rs 50,000 from their own money!
Chidambaram said at a media conference.“I don’t think any bank in India doubled its loan book in two years. No official in the department of financial services of the government noticed it? No one in the RBI read the balance sheet? No auditor noticed this abnormal jump?”The former Union minister said all this pointed to “mismanagement” and called for a “thorough investigation”. “This was incompetence or criminality,” he said. “The RBI must come up with the truth.”Asked about finance minister Nirmala Sitharaman’s allegation that the loans were given by the UPA, he said: “At times I feel I am the finance minister even now and she is in the Opposition. It is possible some loans were given then but the government must explain how the loans jumped from Rs 55,633 crore to Rs 241,499 crore.” Chidambaram asked: “Which committee or who authorised the grant of new loans after March 2014? Were not the RBI and the government aware that Yes Bank was on a loan-giving spree? It was not banking but buccaneering. Why did nothing change after the CEO was replaced? Chidambaram also doubted that the SBI was a volunteer in the rescue act, just like the LIC in the IDBI case. “These are command performances,” he said, adding that the best judge of the management of the economy was the market. According to the finance minister’s answer to a question in Parliament, the amount involved in frauds in banks and select financial institutions increased from Rs 10,171 crore in 2013-14 to Rs 143,068 crore in the first three quarters of 2019-20.”
1. Deteriorating Financial Position: The declining financial position of the bank can be easily understood by the declining share price. The share price of the yes bank was 400 rupees in 2018 which is now standing at just 16.60 as of 6 March 2020.
2. Corporate Customers: The Yes Bank has more corporate customers than retail in its list of customers. Most of the companies Yes Bank has given loans are in loss. That is the reason that yes bank did not receive its loan back on time. The bad economic condition of the companies deteriorated the financial condition of the yes bank also.
3.Governance Issues: One of the founders of the yes bank Mr. Ashok Kapur had died in the 26/11 Mumbai attack. So the wife of late Ashok Kapur wants her daughter to be included in the Board of Directors that is opposed by the wife of Rana Kapur. So the bank had serious governance issues. That is the reason former Deputy Governor of RBI Mr.R Gandhi was included in the BOD of the yes bank. Ultimately the bank reported NPA of Rs 3,277 crore in 2018-19.
4.Outflow of Liquidity: Money deposited by the customers is the backbone of the banking industry. If rumour arises that a particular bank may be in problem in the future; suddenly all the customers start withdrawing money. This practice put the bank into the dock and the bank's deposit started deteriorating followed by a decline in profit.The Yes bank had the deposit book of Rs 2.09 lakh crore at the end of September 2019.
5. Huge Liabilities: The Yes Bank has a total liability of 24 thousand crore dollars. The bank has a balance sheet of about $40 billion (2.85 lakh crore rupees). The Yes Bank has to pay $ 2 billion to increase the capital base.
With deteriorating finances, and no investors within 30 days the government will decide whether the yes bank will be merged or takeover?T he Yes Bank debacle and the unseemly scramble to rescue the fifth largest private bank raise disturbing questions about the effectiveness of regulatory oversight in the country and the ethical issue of bailing out a crumbling financial institution through executive fiat.
Whappens now?
According to experts, the moratorium is like a breather for now while a proper revival plan is put in place. However, it will be of great inconvenience to people. The government has appointed former SBI CFO Prashant Kumar as the administrator. He will now have to work on a restructuring plan for Yes Bank. But the central bank’s decision to supersede the bank’s board and appoint Prashant Kumar, a former deputy managing director at SBI, as its administrator puts a question mark on the previous management’s commitments. State Bank of India said on Thursday night that the board of directors of the bank have given an in-principle nod to explore investment opportunity in Yes Bank. The two possibilities now are either fund infusion into the bank, or a merger with another bank. Yes Bank was placed under a moratorium on Thursday night as the Reserve Bank of India and the government was concerned over its dwindling finances. As of Thursday night, not only was a withdrawal cap of Rs 50,000 placed, the board of Yes Bank was also superseded by RBI. State Bank of India also disclosed to the stock exchanges late Thursday night that its board gave an in-principle approval to explore investment opportunity in Yes Bank, paving way for a possible infusion of funds or the nationalised bank buying a stake in cash-strapped Yes Bank. RBI has capped withdrawls from Yes Bank at Rs 50,000 for the next one month and imposed strict limits on operations after the cash-starved lender faced "regular outflow of liquidity" following an effort to raise new capital failed. The RBI restrictions on Yes Bank have caused panic among the depositors. Yes bank founder, Rana Kapoor arrested by Infromation Directorate after , his daughter was stopped from going out of India. Banker who fell from grace, is now charged with corruption, money laundering, and forgery.
On Friday, the RBI had announced a draft reconstruction scheme called Yes Bank Ltd Reconstruction Scheme, 2020. Suggestions will have to be sent to the banking regulator by March 9. According to the scheme, SBI will have to stay invested in Yes Bank for at least three years with a minimum stake of 26 per cent.At present, the authorised capital of Yes Bank stands at Rs 800 crore. This will be raised to Rs 5,000 crore. Similarly, the number of equity shares will be raised to Rs 2,400 crore. Hoping that SBI does not have to play a trouble shooter at all times, Kumar defended the decision to invest in Yes Bank as he referred to the systemic implications that could result if the bank went bust.“Any enterprise, irrespective of the ownership, is a national asset. If it closes down, it is a huge loss to everyone — employees, the ecosystem which an enterprise supports,” he said, adding that the involvement of SBI in resolving the crisis at the private lender will allay the fears of investors and depositors.“Today if the resolution has to happen, you need a credible name with the investors, creditors and depositors of the bank. With SBI standing behind it, there will be stability in the financial market,” he said. Moreover, SBI’s investments, he disclosed, have always yielded value. The promise of investment has helped it's share prices to go up. Now will we soon see YesBI?
Many believe that Yes Bank should have been allowed to collapse. It is pointless raising the moral hazard now: aside from the problems that depositors would face in such an eventuality, the systemic convulsions would scupper any hope of an economic recovery. The more immediate concern is to ensure that SBI is not overpaying for a lemon. Analysts believe that the net worth of Yes Bank is down to zero and the SBI ought to have bought the entire bank for a rupee. However, SBI is prepared to pump in Rs 100 billion, at a price of Rs 10 per share, inclusive of a ‘control premium’ of Rs 8. The draft rescue plan has one warped element: bondholders whose claim on the bank’s assets rank senior to shareholders will not get a penny. That could complicate this costly bailout. SBI will stay invested in Yes Bank for at least three years. Can this leviathan recover in such a short period? That is a question to which there are no easy answers. Am worried about State Bank; would it be the next to collapse? Why would, should and how could state bank invest 10, 000 crore in a loss making industry? Even Jet Airways was supposed to be financed by State Bank. PNB which collapsed last year was a state bank , Yes Bank is a private sector bank, NPA's not disclosed is said to be the main reason,had the bank got clean bill from the auditor? In Yes bank case, In the eyes of public all this has happened when a past president of ICAI was at the helm of affairs, what can we expect from normal CA firm..he was independent director till last month...he resigned silently when news started to flow in the media.. Past President of ICAI is no ordinary person atleast for a ordinary retail investor...Will ICAI atleast now open its eyes to reality is the test ?? We also need to keep monitoring the financial position of institutions where we have invested. Even if it is a fixed deposit in a public sector bank.
Our trust in even nationalised banks are getting eroded. Thanks to Modi. Are the plans to turn State Bank into Yes Bank, I wonder?
Lesson:
Ravi Subramanian
@subramanianravi
·
Mar 5
Never build a business only for Valuation gains... build for sustained profitability. The world will always say YES to you. #yesbank #flopshow
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