Yes Bank fears more deposits may disappear when COVID-19 moratorium ends and people start repaying loans

• Yes Bank reported a net loss of ₹3668.33 lakh during the fourth quarter.
  
• Between 40% to 45% of its borrowers have opted to exercise the three-month moratorium on loan repayments issued by the Reserve Bank of India.
  
• The bank expects deposits to erode further once the moratorium lifts and its customers withdraw their funds to pay off loans.
  
• Over the last year, Yes Bank deposits half shrunk to half their original size.
  

Yes Bank posted a net loss of ₹3668.33 lakh in its fourth-quarter earnings amounting to a total loss of ₹16,418 crore for the financial year 2019-20.

However, with the onset of the coronavirus pandemic and the ensuing lockdown, the bank is far from being out of the woods just yet. “The extent to which the COVID-19 pandemic will impact the bank's future results will depend on related developments, which remain highly uncertain,” it said in its earnings report.


Within the span of a year, more than half of its deposits — worth ₹1.2 lakh crore — have vanished. Most of the erosion occurred in the past six months after details of Yes Bank founder Rana Kapoor’s scam and the bank’s bad loans came into the limelight.




“Indicators of financial stress and actions taken by the RBI [Reserve Bank of India] resulted in a significant withdrawal of deposits,” auditors said. And, the bank expects deposits to fall further in the coming days once the moratorium ends and depositors need cash to make loan repayments.


Currently, between 40% to 45% of Yes Bank’s retail borrowers opted to exercise the three-month moratorium, along with 35% to 40% of its micro, small and medium enterprise (MSME) businesses.

“While the further reduction in deposits lost post moratorium may cast material uncertainty, particularly in the current COVID scenario, the Bank under the leadership of new management and Reconstituted Board is confident that it can tide over the current issues successfully,” said the bank.

At the end the other end of the balance sheet, advances witnessed a decline of 29%. Resulting in borrowings — the gap between deposits and advances — at ₹1.13 lakh crore for the financial year 2019-20.

After news of the Yes Bank scam came to light, Prashant Kumar was appointed as the new managing director and CEO of the bank. Auditors hope that the change in leadership along with the investors from India’s biggest banks — including the State Bank of India (SBI), Axis Bank, ICICI Bank and others — worth ₹10,000 crore will be enough to turn things around.

Bank	Subscription amount (cr)	Shares (%)
SBI	₹ 6,050	48.2
ICICI Bank	₹ 1,000	8
HDFC Ltd.	₹ 1,000	8
Axis Bank	₹ 600	4.8
Kotak Mahindra Bank	₹ 500	3.6
Bandhan Bank	₹ 300	2.4
Federal Bank	₹ 300	1.9
IDFC First Bank	₹ 250	1.7

See also:
Yes Bank's share price slips 5% ahead of earnings as COVID-19 uncertainty continues to loom after scam

The downgrade of SBI, Bank of Baroda, and ICICI Bank is proof that the 'biggest nightmare' for India's financial sector is becoming real

ED files charge sheet against Rana Kapoor in Yes Bank case