oppn parties Yes Bank: Sinking Into A Morass

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
oppn parties
Yes Bank: Sinking Into A Morass

By A Special Correspondent

Yes Bank shares tumbled nearly 13% to close at Rs 85.90 today. This has been a steep fall from the price a year ago which was ruling at Rs 404. The nearly 80 percent fall in a year has meant that Rana Kapoor, the co-promoter of the 4th largest bank in India, has lost about Rs 7000 crore on his 10 percent holding in the bank.

The drop in price on Thursday was due to the fact that the bank reported quarterly earnings on Wednesday that showed that its bad loan ratio had widened even as the capital buffers had weakened considerably. This created panic selling in the market, leading to a rout. The slide is expected to continue as analysts in financial service firm Jefferies have downgraded the price forecast for the bank from Rs 80 to just Rs 50 saying that the current results are "far worse than we had anticipated".

Yes Bank was pulled up by the RBI over its bad debt accounting policies in 2018. The apex bank trimmed the tenure of MD & CEO Rana Kapoor and asked him to step down by January 31, 2019. The Board of the bank selected ex-MD of Deutsche Bank, Ravneet Gill and his appointment was approved by the RBI. But ever since the RBI intervention, the bank's shares have taken a beating at the bourses as reports came out tumbling that the bank had window-dressed its balance sheet.

Although Ravneet Gill has now said that asset quality troubles have peaked and that the house is back in order, the erosion of capital buffers means that there is more, and serious, trouble in store for the bank. It has to raise capital and since share prices are going south, it will be extremely difficult. A watchlist that has Rs 10000 crore of potentially stressed loans and a book of Rs 29000 crore below-investment-grade exposure do not make for a very rosy picture. Gill's business acumen and experience alone will not be enough to lift Yes Bank from the morass it seems to be sinking into.