Yes Bank share price nose dives 72% after RBI limits withdrawals

• Yes Bank’s share price dipped to 25% as markets opened today morning and is continuing to fall up to 72%.
• Yesterday, the bank’s shares shot up by 27% on rumours that the State Bank of India (SBI) will be bailing out the private bank.
• The dip comes after the Reserve Bank of India’s (RBI) limited withdrawals to ₹50,000.
• Global brokerage firm JP Morgan had earlier said that its share price could fall to ₹1 soon.

Yes Bank share price ballooned yesterday after rumours of India’s biggest bank State Bank of India (SBI) coming to its rescue. However, after last night’s moratorium issued by the Reserve Bank of India (RBI), stocks plummeted to ₹27.65 as markets opened today. Before noon, the stock's share price had gone down by 72%.


Currently, Yes Bank is trading at ₹15.40 — having lost over half its value since yesterday.

The moratorium puts a limit of ₹50,000 on withdrawals for the coming month and this the recent drop may only be the beginning. The shares of Yes Bank, which were trading at around ₹37 a piece yesterday, may only be worth ₹1 soon according to global brokerage firm JP Morgan.

After the RBI’s announcement, Yes Bank’s net banking and mobile banking services were pulled offline. Its ATMs also reportedly ran dry after a rush of people trying to withdraw money.

Earlier today, March 6, RBI governor Shaktikanta Das announced that the RBI has a 'scheme' revive the private sector bank and that it will be announced 'shortly'. Shortly after the announcement, former deputy MD and CFO of State Bank of India Prashant Kumar took charge as YES Bank's administrator

Will the SBI bailout Yes Bank?
Investors may still be hoping that the SBI will bail Yes Bank out. A report by ET hinted that the SBI and the Life Corporation of India (LIC) would acquire 49% stake in the private bank at ₹2 per share for a grand total of ₹490 crore.

However, the government-owned bank has officially said, “No such negotiations or events took place,” in a statement filed with the Securities and Exchange Board of India (SEBI) late last night.

The bank reportedly lost 7% of its deposits in Q2 2020 and posted a loss of almost $85 million — double what analysts had expected. It has been skating on dangerously thin ice the last few months as it hunted for fresh funding to the tune of $2 billion.

After Yes Bank sought a 45-day extension to furnish its third-quarter earnings, Bloomberg reported that it had brought former CEO of Deutsche Bank and president of Cantor Fitzgerlad, Anshu Jain, on board to help raise funds.

However, with the fast-approaching March 14 deadline, sources told Mint that RBI may have to intervene. The options of the table varied from a direct bailout to selling pooled assets to a public sector bank. The fear was that the downfall of Yes Bank would worsen the slowing credit growth rate in India.

As of now, the horizon looks bleak for Yes Bank as its depositors scramble to pull their funds despite RBI’s assurances that there is no need to panic. Equity analyst Ravikant Anand Bhat told Bloomberg, “It looks like the end of the road for the company. A bank is placed under moratorium only when other efforts to turnaround and revive the bank have failed.”

The unfolding crisis at Yes Bank may also end up being how things can go wrong for small investors looking to make a quick buck on rumours.

See also:
In the Yes Bank crisis, one chart shows how rumours were used to trap small investors

SBI statement on proposed Yes Bank bailout is far from reassuring

Yes Bank mobile and net banking down after RBI limits withdrawals to ₹50,000