YES Bank gets Rs 60k-cr line of credit from RBI to resume operations

RBI Governor Shaktikanta Das on Monday had said the regulator was ready to offer liquidity if required

The Reserve Bank of India (RBI) has extended a credit line of Rs 60,000 crore to YES Bank to ensure that the bank is able to meet its obligations to depositors as it resumed its full-service operations on Wednesday, according to sources familiar with the development. RBI Governor Shaktikanta Das on Monday had said the regulator was ready to offer liquidity if required.

“YES Bank has enough liquidity to meet any requirements. If required, the RBI will provide necessary liquidity support to it,” he said. “Never in the history of banks (in India) have depositors lost money. The point is, depositors’ money is absolutely safe,” Das had said in a conference, adding that the central bank’s support should come as a “comforting factor for depositors”.

However, this is a case of the RBI being the “lender of the last resort”, and, in accordance with the terms of the arrangement, the bank will have to use its immediate liquid assets before it can touch the credit line, sources said. This is perhaps for the first time that the RBI has come with such an arrangement. YES Bank gets Rs 60k-cr line of credit from RBI to resume operations In the past it preferred merging troubled banks with solvent ones. There is a technical reason for that even as the RBI officials did not spell it out in the press conference on Monday.

All banking services to resume from evening; ATMs have cash: YES Bank

On March 5, the RBI had imposed a moratorium on YES Bank, restricting withdrawals to Rs 50,000 per depositor till April 3 in view of its poor financial health due to bad loans

YES Bank, on which the Reserve Bank of India (RBI) had imposed a moratorium, will resume normal operations from 6 pm on Wednesday. On Tuesday, administrator of the troubled private sector lender, Prashant Kumar, said that YES Bank will resume normal operations from 6 pm on March 18 and it has no liquidity problem. “Our customers will be able to enjoy all the services available before the moratorium. There is absolutely no issue on the liquidity side from YES Bank. All our ATMs are full of cash,” he had said at a press conference. Kumar had also said there is no need to worry about deposits. “Complete normalcy will be restored. All branches and employees are ready. If there is too much rush of depositors, the bank branches will remain open on weekends as well,” he had added.

On March 5, the RBI had imposed a moratorium on YES Bank, restricting withdrawals to Rs 50,000 per depositor till April 3 in view of its poor financial health due to bad loans. “Only one-third of our customers have withdrawn Rs 50,000 during the moratorium. The customer feedback is that they do not feel the need to withdraw money from the bank. We have had higher inflows than outflows in the last few days,” Kumar had stated.

At the same press meet, State Bank of India (SBI) chairman Rajnish Kumar said that the lender is free to sell shares but assured that not one share will be sold in the next three years.”We are not against retail shareholders. We are all here to protect them,” he had said.The SBI has announced an investment of Rs 7,250 crore in YES Bank through the acquisition of 725 crore shares at Rs 10 each. SBI’s shareholding in YES Bank after reconstruction will be within the 49 per cent limit.

YES Bank case: ED summons Anil Ambani, Subhash Chandra and Naresh Goyal

The agency also calls Subhash Chandra, Naresh Goyal, Kapil Wadhawan, and Peter Kerkar in money laundering probe

The Enforcement Directorate (ED) has issued summons to a clutch of borrowers of YES Bank, including Essel group Chairman Subhash Chandra, Jet Airways founder Naresh Goyal, Cox & Kings promoter Peter Kerkar, Dewan Housing Finance promoter Kapil Wadhawan, and a few more in connection with the money laundering probe against YES Bank co-founder Rana Kapoor. Besides, the federal agency has issued fresh summons to Reliance Group Chairman Anil Ambani asking him to appear on Thursday.

Ambani was summoned on Monday for questioning related to the stressed loans that were sanctioned to ADAG group during Kapoor’s tenure. But he has filed adjournment application with the ED seeking more time. An ED official said it was examining all the big borrowers of YES Bank and that is why each of the borrower had been asked to join the probe this week. Sources said ED wanted to deep dive into all the accounts which had defaulted and the loans had turned into bad debts. The agency will record the statement of the management and promoters of all the stressed firms and will make it part of the prosecution complaint, the source said.

Other than the bad debt accounts, the probe agency is verifying the rationale behind Kapoor keeping some of his realty assets on mortgage with some housing finance firms. “These properties that were kept on mortgage were actually the illegal gratification, which Kapoor has received on advancing loans to entities without due diligence and were not in line with the Banking Regulation Act,” an ED official said…

YES Bank AT1 bond write-down reflects distinct treatment for private banks

The bailout scheme requires YES Bank to write down about Rs 8,700 crore ($1.2 billion) of outstanding AT1s

Rating agency Standard and Poor’s on Monday said the decision to write-down YES Bank’s additional tier-1 (AT1) bonds highlights the distinction in India in treatment of instruments issued by public sector banks and those from private banks. This would create losses for asset managers and raise capital costs for issuers. A complete write-down would likely raise the risk premium that investors price into Indian hybrids, said S&P Global Ratings credit analyst Deepali Chhabria.

The bailout scheme requires YES Bank to write down about Rs 8,700 crore ($1.2 billion) of outstanding AT1s. AT1 investors have filed a petition in court against the RBI, YES Bank and the government. Media reports indicate that parties are exploring an out-of-court settlement, with AT1 investors clamoring for conversion of AT1s into equity.

Under the Basel III framework, AT1 instruments are designed to be loss-absorbing tool. The holders of the debt might not get repaid in the event of financial stress. Indian regulations state that such instruments should absorb losses while the bank remains a going concern. RBI’s decision to permanently write down YES Bank’s AT1s was in line with the agency’s view that these instruments will absorb losses at private sector banks, not public sector banks, rating agency said. Indian banks’ AT1s categorically provide that any capital infusion by the government of India into the issuer as the promoter in the normal course of business may not be construed as a point of non-viability trigger. The thinking goes that, since the government owns the bank, it has the right to inject capital into the lender…

Read More On YES Bank

YES Bank fiasco: RBI asks states not to withdraw funds from private banks

‘We strongly believe that such a move can have banking and financial sector stability implications,’ the letter stated

The Reserve Bank of India (RBI) on Thursday urged the chief secretaries of all states to not withdraw deposits from private sector banks for the sake of financial sector stability, and assured them of the safety of these funds. The government of Maharashtra recently closed one account with Axis Bank, and decided to transfer funds from the private sector to public sector banks. The state government also advised its various departments to not put funds with private sector banks in view of the YES Bank fiasco. A few other state governments are also contemplating similar actions.

“We strongly believe that such a move can have banking and financial sector stability implications,” the letter, signed by RBI Deputy Governor N S Vishwanathan, stated. “We would like to point out that the Reserve Bank has adequate powers to regulate and supervise private sector banks, and by using these powers, it has ensured that the depositors’ money is entirely safe,” Vishwanathan said. Business Standard has reviewed a copy of the letter. The apprehension about the safety of deposits is “highly misplaced” and such a “reactive decision” will not be in the interests of the stability of the financial system in general and the banking system in particular, he said.

The resolution of weak private sector banks in the past has been done in a manner that the “depositors are not put to loss”. In the case of YES Bank too, after the imposition of a moratorium, the RBI drew up a draft scheme “without any delay”, the deputy governor wrote, adding that the central bank was making “every effort to expedite the finalisation of the scheme”.

YES Bank bondholders say will withdraw court plea if RBI accepts offer

Overall, more than Rs 8,000 crore of investments are exposed to YES Bank’s AT-1 bonds

Investors in YES Bank’s additional tier-1 (AT-1) bonds have written to Reserve Bank of India (RBI) that will accept the regulator’s offer where they can recover at least 20 per cent of investments and will subsequently withdraw petition from Bombay High Court (HC). The bondholders, in a letter sent through Axis Trustee Services, proposed that they be allotted a minimum 1,700 million shares in proportion to their current exposures.

As a result, the imputed value will work out to Rs 10 per share, which would approximately amount to Rs 1,700 crore. This will lead to “salvaging near-about 20 per cent of the principal outstanding,” the note said. Further, the bondholders have requested that the lock-in features, if any should be restricted upto 36 months in-line with the proposed new equity issuance of issuing bank. The trustee also pointed out that if the above terms are acceptable, the majority bondholders of AT-1 bonds — for which Axis Trustee is acting — shall not purse any further legal recourse and will instruct to withdraw the current petition. Axis Trustee has filed a petition at Bombay HC on behalf of the bondholders, seeking relief on RBI’s proposal for full writedown of YES Bank‘s AT-1 Bonds.

However, legal arguments are yet to begin in the court, with the matter still in pre-admission stage. Meanwhile, L&T and L&T Officers and Supervisory Staff Provident Fund also moved HC on Wednesday, seeking relief against RBI’s move. Overall, more than Rs 8,000 crore of investments are exposed to YES Bank’s AT-1 bonds.

YES Bank crisis: Cabinet likely to take up revival plan on March 13

RBI Governor Shaktikanta Das had met SBI Chairman Rajnish Kumar on Friday to discuss the way forward.

The Reserve Bank of India’s (RBI’s) recovery plan for YES Bank will require the focal government’s endorsement, which may come in by Friday, as indicated by an administration official. The draft ‘YES Bank Ltd Reconstruction Scheme, 2020’ will be set up for the endorsement of the Union Cabinet, led by Prime Minister Narendra Modi, when it meets on Friday, the authority said.

The RBI had made the draft recreation plot open on Friday, a day after it assumed control over the leading body of the upset moneylender and forced limitations on loaning and withdrawal exercises. The RBI had welcomed remarks from State Bank of India (SBI), which is relied upon to hold 49 percent stake in YES Bank, and different partners by Monday. RBI Governor Shaktikanta Das had met SBI Chairman Rajnish Kumar on Friday to examine the route forward. chartAfter analyzing remarks on the draft conspire, the RBI may alter the arrangements and send it for the endorsement of the focal government.

Guideline Act, 1949, the Center can support the plan with no adjustments or with certain changes “as it might think about vital”.The scheme will come into force from the date as specified by the central government and there may be “different dates for different provisions of the scheme”, according to the law.

There was enough time to put together plan for YES Bank: Raghuram Rajan

Crisis-ridden Yes Bank was put under a moratorium last week, with the RBI capping withdrawals at Rs 50,000 per account and superseding its board.

Previous RBI senator Raghuram Rajan on Wednesday said there was a great deal of time to assemble an arrangement for YES Bank which had given “enough” notice about the issues it was confronting. Emergency ridden YES Bank was put under a ban a week ago, with the RBI topping withdrawals at Rs 50,000 for each record and overriding its board. SBI is set to get 49 percent stake in the bank under RBI’s reproduction plan.

“Truly Bank had given us enough notification that it has been in difficulty…so there was sufficient opportunity to assemble an arrangement. “I trust what we have is best accessible (plan), however I would prefer not to re-think, since I don’t have the foggiest idea about the subtleties,” Raghuram Rajan said in a meeting to CNBC-TV18. Rajan, who finished his three-year term at the RBI in 2016, attested that he has been stating for quite a while now that there is a need to tidy up the money related division rapidly and in a steadfast manner with the goal that the nation can push ahead.

“Reluctance to tidy up has delayed condition of discomfort in Indian economy… “Tidy up must be attempted on a crisis premise, in any case feeling of certainty which is required in our NBFC, private banks and even in our state-possessed banks that would be feeling the loss of, that implies money related part can’t add to the development,” he said. Rajan, an educator of fund at the University of Chicago Booth School of Business, likewise worried on making the monetary records of budgetary establishments as perfect as could reasonably be expected, fixing administration issues and recapitalising banks. “So this is something we began in 2015, and it’s 2020, 5 years is unreasonably long for it,” he said…

ED probes Rana Kapoor's role in YES Bank's Rs 30,000-cr bad loans

The special court under the Prevention of Money Laundering Act granted an extension to keep Rana Kapoor under custody till March 16

The exceptional court under the Prevention of Money Laundering Act (PMLA) allowed an expansion to the Enforcement Directorate (ED) to keep Rana Kapoor under care till March 16. The ED had looked for expansion of Kapoor’s authority to test his job in YES Bank’s terrible obligations of Rs 30,000 crore. It will likewise investigate whether the monies were “siphoned and washed” to the 78 substances constrained by the bank’s fellow benefactor.

“It has been seen that more than Rs 30,000 crore was given as advances by YES Bank to a few organizations/elements during the residency of Kapoor in YES Bank which have changed over into terrible obligations. Kapoor is required to be grilled to learn if, in the pretense of these credits, the monies have been siphoned and washed,” the ED said in its remand application to court.

The ED included that it was examining credits of over Rs 20,000 crore from the perspective of inconsistencies, renumeration and preoccupation. Examination has uncovered that around 78 organizations claimed by Kapoor’s relatives were being controlled and overseen by Kapoor. The ED stated, “Records identified with these organizations/firms are to be acquired,” and included that Kapoor would be gone up against to discover redirecting of assets from YES Bank to these organizations. The ED named Kapoor, his significant other Bindu and three little girls — Roshini, Radha and Raakhe — as denounced in the issue.

YES Bank rescue plan: How brokerages have interpreted the proposals

Macquarie has suggested that taxpayers will the biggest casualty in the government-approved bailout plan for YES Bank

State Bank of India (SBI) chairman Rajnish Kumar on Saturday sought to allay concerns regarding the proposed rescue plan for YES Bank, which involves the state-owned bank picking up a 49 per cent stake in the latter, subject to conditions. The proposed plan saw stocks of YES Bank and SBI take a hit in trade on Friday, with leading brokerages such as Macquarie suggesting taxpayers will the biggest casualty in the government-approved bailout plan. JP Morgan, on the other hand, has revised down the target price of YES Bank stock to Rs 1.

Here’s how leading brokerages have interpreted the proposals and its likely impact on YES Bank, SBI and the baking sector.

Macquarie: The fact that government is considering such a bail out proposal clearly shows the risk inherent in investing in PSU banks/companies who continue to be subjected to the vagaries and compulsions of the government. The bigger casualty is taxpayers as their money is being used to infuse capital in PSU banks time and again. In other words, it is the taxpayers who are bailing out YES Bank indirectly in our view.

One buys a bank for its liabilities franchise and not for its assets. We are unsure of YES Bank’s quality of liabilities franchise, which perhaps could have further got affected due to the current solvency issues. Consolidation would have brought about a lot of integration challenges as well as legal challenges as we believe SBI Act needs to be amended for SBI to acquire a private sector bank. Even in this case, the deal will require blessings of the regulator as well as the Government. READ MORE HERE

JP Morgan: The quasi sovereign bailout (by SBI/LIC) is in fact bond holder / depositor – led bailout and not an equity one. In sum, we think the bank will need to be recapitalised at nominal equity value and could test dilution of AT1s. We remain underweight and cut our target price to Rs 1 as we believe net worth is largely impaired…

YES Bank resolution will be swift, 30 days is an outer limit: RBI governor

The RBI governor also said that the impact of Covid-19 on India will be limited

Speaking on the move to take control of YES Bank, Reserve Bank of India's (RBI) Governor, Shaktikanta Das said, "The decision is taken at a 'larger level', not at individual entity level, the move is aimed at ensuring safety of financial system." The governor expressed confidence that the YES Bank resolution will be done very swiftly and 30 days has been set as the outer limit. The RBI governor also said that the impact of Covid-19 on India will be limited, but cautioned that certain sectors which depend on China will be impacted due to the epidemic and the mitigatory steps are being taken.

"Impact on India will be limited as the economy is not too integrated with global value chain; and to that extent, we will be insulated," he said. The RBI governor added that global growth may slow down as Covid-19 spreads rapidly. Shaktikanta Das expressed confidence that all central banks will be resolved to work in close coordination. The governor had stated that RBI stands ready to intervene in whatever way required to respond to epidemic challenges.

The coronavirus (Covid-19) outbreak has now spread to more than 78 countries — from South Korea to Italy, Iran, Japan and the United States. At least 11 people have died of Covid-19 in the US while UK reported its first death. A total of 97,873 cases have been reported worldwide and 3,382 people have died of the virus. However, according to reports of the total cases 54,121 cases have recovered from the infection.

Yes Bank depositors rush to ATMs but most unable to withdraw cash

In the residential area of suburban Chembur, one ATM was dispensing cash but had a long queue of anxious depositors

Harried Yes Bank depositors rushed to ATMs to withdraw cash but faced multitude of problems including closed down machines and long queues, after the RBI placed the bank under a moratorium, capping maximum withdrawals at Rs 50,000 per account for a month. Aggravating the problems of depositors were difficulties accessing the internet banking channel, which ensured that they can’t transfer the funds online as well.

At an ATM in south Mumbai’s Horniman Circle, with the RBI headquarters overlooking it, the shutters were pulled down. The guard on duty said the machine was non-operational before he reported to work late in the evening and he was ordered to shut it after 2200 hrs.

In the residential area of suburban Chembur, one ATM was dispensing cash but had a long queue ofanxious depositors. One man said it was still possible to withdraw up to Rs 50,000 in multiple transactions from the machine. However, another machine nearby had run dry within minutes of the RBI announcement, a woman said. The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender. For the next month, Yes Bank will led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.

Keep Reading: Yes Bank News

RBI supersedes board of troubled YES Bank, sets Rs 50,000 withdrawal limit

Lender placed under moratorium; withdrawal capped at Rs 50,000; govt, central bank flag governance issues

Yes Bank Crisis: The reserve financial institution of india (rbi) on thursday superseded the board of bothered non-public zone lender sure financial institution and imposed a 30-day moratorium on it “within the absence of a credible revival plan” amid a “serious deterioration” in its financial fitness.

Former country financial institution of india chief economic officer prashant kumar has been appointed administrator of yes bank, and every depositor could be capable of withdraw only up to rs 50,000 in overall until the moratorium is in vicinity, the rbi said in two reputableStatements issued on thursday evening. but, in amazing situations together with a clinical emergency or marriage, depositors can withdraw up to rs five lakh or the quantity lying in account, whichever is less.

That is the first time that a financial institution of this size may be positioned beneath a moratorium by means of the rbi. at some point of the moratorium, which got here into impact from 6 pm on thursday, sure bank will now not be allowed to grant or renew any loans, and “incur any liability”, except for payment closer to personnel’Salaries, rent, taxes and prison fees, amongst others. The imperative bank stated the decision became taken within the public interest and inside the interests of the financial institution’s depositors, and that it turned into left with “no opportunity”…

YES Bank share sale: Erwin Singh Braich, family offices may not be included

Bank plans to raise $1.75 billion; in talks with five European institutions: Ravneet Gill

YES Bank is likely to skip issuing shares to family offices in favour of institutional investors in the current round of its preferential issue, where the bank plans to raise $1.75 billion, its managing director and chief executive officer, Ravneet Gill, has said.

This means Erwin Singh Braich, GMR Group, and Aditya Birla Family Office, which had all put in bids, may not get a piece in the bank’s stake sale. Denying reports of a forced merger being thrust upon the bank, he said he was confident of raising the target funds soon.

“Large European financial institutions regulated by the Financial Conduct Authority have shown an interest in the bank,” Gill told Business Standard in an interview. “Since the talks are at an advanced stage, the bank will reveal the names of these investors once it enters into a binding agreement with them,” he added. It is understood that YES Bank has received an interest from four to five financial institutions, and one of them could take as much as 10 per cent in the bank. Others are expected to pick up a 4-5 per cent stake each.

Gill said that since these investors are well-governed and established names, they should pass the ‘fit and proper’ test of the Reserve Bank of India. “When these bids become binding and once we disclose the names, then nobody would have any concerns with regard to the quality of investors or their ability to put in the money. So, it will effectively put a lid on the issue once and for all,” Gill said.

Braich had bid for $1.2 billion in the proposed $2-billion stake sale, while the Citax group evinced interest to the tune of $500 million. Other family offices were to put in about $100 million, according to a YES Bank release. Gill said, “As far as Indian investors and family offices are concerned, we have told them that for this capital raise, we have to go for the institutional route.”

YES Bank: World’s worst-performing bank stock posts globe’s biggest surge

Its shares have rallied about 50 per cent — the biggest gain among global peers valued at more than $1 billion — after embattled founder Rana Kapoor was forced to sell his holdings in October

India’s Yes Bank Ltd., the world’s worst-performing lender in 2019, has posted the globe’s biggest gain over the past month.

Its shares have rallied about 50 per cent — the biggest gain among global peers valued at more than $1 billion — after embattled founder Rana Kapoor was forced to sell his holdings in October and a new management team promised fresh capital and lower bad loans. The surge helped pare the annual loss in the Mumbai-based lender’s shares to 63 per cent. Yes Bank rose about 3 per cent as of 9:48 a.m. in Mumbai on Monday, while the main equity index was little changed.

The recovery will be a relief for new Chief Executive Officer Ravneet Gill, who’s been courting investors to revive the bank. India’s billionaire investor Rakesh Jhunjhunwala this month bought shares of Yes Bank, after the lender announced a binding offer from an unidentified global investor to inject $1.2 billion. Gill is rushing to raise funds. Latest results released this month show Yes Bank swung to a loss in the September quarter and its bad-loan ratio rose.“Capital is of utmost importance to the bank and we want the money to be in the bank by December,” Gill told reporters after the results. “Once we get the capital it will run us for 24 months.”

Yes Bank files complaint against ‘fake news’, attempt to scare depositors

Yes Bank seeks multi-disciplinary team of experts for detecting the origin of the fake news.

Yes Bank on Sunday said it has file a police complaint against “fake news and rumours” on social media about its finances, saying there was an attempt to scare depositors. The bank complained to the Mumbai Police’s cyber cell after its promoters cut their stake and the company’s shares took a beating at stock exchanges. “Yes Bank has lodged a complaint with Mumbai Police and Cyber Cell against the dissemination of fake news and spread of rumours about the bank’s financial health on WhatsApp and other social media platforms,” the bank said in a regulatory filing.

It requested authorities to form a multi-disciplinary team of experts for detecting the origin of the fake news and assess the short-sell positions, held either directly or indirectly, by such accused persons.

“Over the past few days some miscreants have been spreading false information and malicious rumours about Yes Bank on WhatsApp and other social media platforms to create panic and fear in the mind of its depositors. The messages attempt to portray the bank in poor light and are intended to tarnish the image of the bank in the eyes of its depositors, stakeholders and the general public,” the bank said.

“The bank appeals to its trusted patrons to be cautious of false information circulating against it and assures that its financial position continues to be absolutely safe and sound,” it said...

YES Bank’s co-founder Rana Kapoor likely to sell his stake to Paytm

According to reports, Kapoor has held preliminary talks with Vijay Shekhar Sharma, founder of One97 Communications

Rana Kapoor, co-founder of YES Bank, is said to be in talks with One97 Communications, owner of Paytm, to sell his stake in the private sector lender. Kapoor and his associate entities owned 10.6 per cent in the bank at the end of June 2019. Around 7.34 per cent of the Kapoor family stake has been pledged with Reliance Nippon Asset Management Company (RNAMC).

According to reports, Kapoor has held preliminary talks with Vijay Shekhar Sharma, founder of One97 Communications. The structure of the deal would depend on the approval from the Reserve Bank of India (RBI), given that Sharma already owns a stake in Paytm Payments Bank, said sources.

Kapoor refused to comment on the development, while Paytm did not respond to Business Standard’s queries. YES Bank said it was a matter related to the promoters. An RNAMC spokesperson said, “Reliance Nippon Life Asset Management has not given any consent and is not in discussion with anyone about YES Bank’s pledged shares.”

YES Bank had been under the regulator’s scanner for its corporate governance practices and the under-reporting of bad loans numbers. Kapoor was denied an extension to continue as MD and CEO by the RBI in November 2018.