Introduction
Yes Bank was
established jointly by Rana Kapoor and Ashok Kapoor in 2004. Although there
were legal controversies regarding the ownership of Yes Bank after the
unfortunate death of Ashok Kapoor, Rana Kapoor had taken the responsibility of
running Yes Bank.
Detail
analysis of Yes Bank Scam
The fall of Yes bank began in 2008. It was
believed and suspicions began to arise when the working style of Rana Kapoor
changed and he began to lend loans aggressively to “Stressed Companies” and
charged high interest rates on the given loans.
He began to play very
risky game with banking system and these facts were first pointed out by UBS.
In 2015, UBS or Union Bank of Switzerland is a global financial services
company who claimed that the major reason behind the sudden rapid success was
them lending loans to stressed or vulnerable companies.
Stressed companies are highly risky companies
who are not able to repay loans on time and generally are prone in making
defaults. The reason behind Yes Bank Scam was combination of bad loans and NPAs
(non-performing assets). If for 90 days or more, the loans are still not paid
and the payment is delayed, then such loans would come under NPAs.
The rising NPAs of Yes
Bank were also noticed by Reserve Bank of India (RBI) in 2017.It began to
monitor the mentioned bank very strictly. RBI also discovered that not only the
NPAs of the Yes bank was also the bank was hiding its real figure of NPAs. RBI
discovered that the bank was projecting a fake figure of its NPAs. The
difference between the actual figure and the real figure was found to be 3000
crore rupees.
According to the reports, majority of loans had
been given by Yes Bank after 2014. It was also discovered that in 2014, 55,000
crore rupees of loan had been lent by the bank according its loan books. The
loan lending had increased to 2 lakh 41 thousand crore rupees.
From the above analysis, RBI is strictly monitoring
the working of Yes Bank since 2017. However, there are so many loan lending
transactions which still took place between 2017 and 2019. One question which arises
is that in spite of knowing the working and condition of Yes bank, why were
they giving loans to these companies?
Consequences
On September 2018, in order to save Yes
Bank, RBI instructed and ordered Rana Kapoor to resign from CEO position. On November
2018, not only the rating of the bank continuously fell but also two
independent directors and a chairman of the bank resigned.
Thereafter, Rana Kapoor was no longer
the CEO of Yes Bank in January, 2019.
Reputed credit rating firms such as CARE
(Credit Analysis & Research) and Moody’s have given very bad ratings to the
bank. According to Moody’s the bank is in a stable condition anymore and it has
given a negative rating to the bank.
Ravneet Gill became the new CEO of the YES
Bank. The bank still had to face number of hardships due to the scam; booking its
first quarterly loss on April 2019. Moreover, the stock of the bank had been
degraded to 30%, and their NPL ratio fell to 8%. Rana Kapoor had to sell his
entire shares which were worth 142 crore rupees on November 2019.
According to many reports and news, it
was anticipated that RBI might purchase this bank (YES Bank). ED (Enforcement
directorate) found that Rana Kapoor alongside his relatives claimed 78 shell
organizations (is an organization that another organization takes over to
acquire advantage from its name) in beyond couple of years.
All the information and activities performed
by such companies were tracked by ED and CBI through DIN (Director
Identification Number). Thereafter, for performing the crime of fraud and money
laundering, Rana Kapoor was arrested by ED on 8th March,2020.
Measures taken
by RBI
Moreover, on 5th March 2020, RBI brought
this entire matter into their hands by declaring moratorium and setting a
limitation that the individuals who have saved their cash in YES Bank, can just
pull out 50,000 rupees in a month and not more than that, with the exception of
emergency cases. After this the stock of the bank tumbles down, Sensex likewise
tumbles down.
Conclusion
In spite all of this, on the off
chance that your cash is stored in Yes Bank today, there is no reason that
anyone should fear as your cash is protected and you will get it from the bank
on schedule.
Since, Yes Bank is an exceptionally
gigantic bank and the government in any case will figure out how to run this
bank, since they can't manage the cost of the disappointment of the bank, since
there are many individuals reliant upon it.
Furthermore, on the off chance that investors
didn't get their cash back, the trust and the certainty of the contributors
will lose from the financial framework which not only includes the clients of Yes
Bank but also clients of different banks too.
Individuals will imagine that now their cash
isn't protected in any bank, so it's smarter to pull out their cash as quickly as
possible which might cause a bank run.
This will not only have a negative
influence only on the Yes Bank but also every other banks as well. The entire
financial framework will implode. That is the reason why government won't allow
this bank to fizzle under any conditions.
