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Many reports suggest that Kapoor would cut deals with promoters without going as a consortium even for large loans. While this helped swell the loan book, it also landed the bank in trouble.
Yesterday RBI supersedes YES Bank board and limits withdrawals to ₹50,000 for a month.
The troubles at YES Bank started 2 years back.
Like many peers, the bank was stressed out as many loans turned bad or non-performing assets.
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While the Reserve Bank of India (RBI) decided to supersede the board of YES Bank yesterday (March 5), it has been sounding off many alarms for months now.
Like many peers, the bank was stressed out as many loans turned bad or non-performing assets. In fact, it has exposure to institutions and companies which have gone down in the last few years be it IL&FS, Deewan Housing, Jet Airways, Cox & Kings, Altico Power, Coffee Day and more.
However, it is not just bad loans but its credit practices, the manner of leaving caution to wind and corporate governance brought it to its logical end.
It is not just the Reserve Bank of India (RBI) but multiple rating agencies and auditors have pointed out to YES Bank’s lending practices.
Many reports suggest that Kapoor would cut deals with promoters without going as a consortium even for large loans. While this helped swell the loan book, it also landed the bank in trouble.
As the economic downturn landed many of its loans in trouble territory, Yes Bank started hiding the extent of its stressed loans. Soon, the regulator got wind of it and took action that led to the ouster of its founder Kapoor, from the bank.
Apart from credit practices, the bank was hit with reports that markets regulator SEBI would investigate it for insider trading. There were reports linking Kapoor’s personal investments and the affairs of the bank.
While a change in management did bring some hope, a crucial second round of fund raising was mired in several rumours, announced and deals that were never done.
In spite of claims that multiple international investors were keen on infusing funds, no funds ever came in, which made RBI supersede the board.