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<ul><li>State Bank of India (SBI), Axis Bank, HDFC Bank and other banking stocks are treading on the side of caution ahead of the <keyword id="6354977" type="ORGANIZATION" weightage="20" keywordseo="Supreme-Court">Supreme Court</keyword>’s hearing on moratoriums loans today. </li><li>ICICI Bank is the worst hit with its share price dipping by more than 2%.</li><li>The Supreme Court is yet to pass a verdict on whether the moratorium should be extended and if interest on interest should be charged. </li></ul>The Supreme Court is set to resume its hearing on waiving interest on loans that availed moratorium during the coronavirus pandemic today. The last time around, the bench headed by Justice Ashok Bhushan indicated that it was <a href="https://www.businessinsider.in/finance/banks/news/supreme-court-inclined-to-excuse-moratorium-interest-on-interest-as-it-gives-the-government-another-two-weeks-to-file-detailed-affidavit/articleshow/78033878.cms">‘inclined’ to excuse the ‘interest on interest.’</a> However, since then, the hearing has been postponed twice to give the government, <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) and other stakeholders more time to file their response. Banking stocks are cautious in trade ahead of the hearing, most of them in the red. <keyword id="4774972" type="PERSON" weightage="20" keywordseo="icici-bank-share-price">ICICI Bank share price</keyword> is down by as much as 2%, while others remain largely unchanged. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">% change in share price </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICICI Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-2.33% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">State Bank of India (SBI) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.06% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IndusInd Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.03% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-0.42% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-4.0% </td></tr></tbody></table>Source: Share price as of 10:10am on BSE According to Solicitor General Tushar Mehta, a committee had been formed at the ‘highest levels’ to decide on moratorium extension, interest during the moratorium, interest on interest, and other issues related to the moratorium period. The RBI’s stance on loan moratorium In its affidavit, the RBI told the Supreme Court that extending the moratorium beyond six months will impact overall credit discipline and have a ‘debilitating impact’ on the credit creation process. On the issue of compound interest, the RBI asserted that waiver of the same would result in ‘significant economic costs’ for banks to absorb. The larger ripple effect may lead to implications for borrowers and undermine broader financial stability. Central government’s take on loan moratorium The central government asserted that it would waive compound interest (interest on interest) during the moratorium period for MSMEs and personal loans up to ₹2 crore in its affidavit filed ahead of the last hearing. However, Senior Advocate C. Aryama Sundaram argued that the real estate sector is completely left out of the scope. The bench was also not pleased, highlighting that the central government’s affidavit did not provide the necessary details regarding the questions asked by the court earlier. SEE ALSO: <a href="https://www.businessinsider.in/defense/news/india-china-disengagement-looks-unlikely-with-more-chinese-troops-reportedly-being-deployed-at-the-border/articleshow/78632960.cms">Chinese PLA is reportedly rotating troops despite India's insistence on disengagement from friction points along the border</a> <a href="https://www.businessinsider.in/business/corporates/news/wipros-second-quarter-will-be-telling-of-how-its-new-ceo-is-steering-the-ship/articleshow/78623027.cms">Wipro's second-quarter will be telling of how its new CEO is steering the ship</a> <a href="https://www.businessinsider.in/policy/economy/news/sitharaman-offers-states-12000-crore-interest-free-for-the-next-50-years-if-they-can-spend-it-on-capital-projects-by-march-2021/articleshow/78616741.cms">Sitharaman offers states ₹12,000 crore interest-free for the next 50 years if they can spend it on capital projects by March 2021</a> <a href="https://www.businessinsider.in/science/space/news/mars-will-appear-bigger-redder-and-brighter-on-october-13-and-wont-get-this-close-to-earth-again-until-2035/articleshow/78556539.cms">Mars will appear bigger, redder, and brighter on October 13 — and won’t get this close to Earth again until 2035</a>

SBI, HDFC Bank, Axis Bank and other bank stocks tread caution as they wait with bated breath for Supreme Court verdict on moratorium

<ul><li><keyword id="6355975" type="COMPANY" weightage="20" keywordseo="axis-bank">Axis Bank</keyword>’s share price is up by over 6% in early morning trade.</li><li>The jump in stock value comes after the bank revealed that its moratorium book was only 9.7% of the total portfolio in terms of value. </li><li>Axis Bank has also built up buffers to the tune of $900 million to address stressed assets and COVID-19 contingency.</li></ul>Axis Bank’s share price rallied over 6% in early morning trade, reacting to its Q1 earnings posted last evening. The primary concern over asset quality was assuaged when the bank disclosed that only 9.7% total portfolio consisted of loans that had opted for the Reserve Bank of India’s (RBI) moratorium. <div type="image" title="axis bank stock price (1)" msid="77100086" hostid="261" caption="&amp;lt;p&amp;gt;Axis Bank stock price surges by over 6%&amp;lt;/p&amp;gt;"></div> Analysts are now positive about Axis Bank’s growth and have increased their earnings estimates based on the bank’s strong net interest income (NII) growth and sequential decline in provisions. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Brokerage </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Target Price </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Motilal Oswal Securities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 600 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IDBI Capital </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 530 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Securities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 565 </td></tr></tbody></table> 90% of the customers who opted for the second moratorium are the same as the ones who opted for the first moratorium. Nonetheless, management said that Axis Bank remains cautious which is why it has a provision buffer of nearly $900 million and is building up a solid war chest. <div type="Article" hostid="261" msid="77086850" title="Axis Bank has set aside over $900 million fearing COVID-19 may sour loans" mstype="2" mssubtype="0"></div> In June, 80% of corporate clients and 70% of customers in retail who had opted for the moratorium successfully paid the interest on their loans. The bank’s Gross Non-Performing Assets (GNPA) ratio and Net Non-Performing Assets (NNPA) ratio has also improved over last quarter. <div type="image" title="Axis bank GNPA NNPA" msid="77100109" hostid="261" caption="&amp;lt;p&amp;gt;Axis Bank&amp;#39;s GNPA and NNPA ratios over the last five quarters&amp;lt;/p&amp;gt;"></div> This has helped boost the provisions coverage ratio (PCR) to 75%, an increase of 576 basis points (bps) over the last quarters. A hundred bps make up 1%. “Post near term stress taking shape, we expect the book to normalize and improve thereon,” said IDBI Capital’s review. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/axis-bank-has-set-aside-over-900-million-fearing-covid-19-may-sour-loans/articleshow/77086850.cms">Axis Bank has set aside over $900 million fearing COVID-19 may sour loans</a> <a href="https://www.businessinsider.in/stock-market/news/hdfc-bank-share-price-rises-on-bond-issue-and-increase-in-provision/articleshow/77061426.cms">HDFC Bank is beefing up capital and provision to cushion a spike in bad loans post moratorium — and that’s helping its share price</a>

Axis Bank share price surges over 6% after earnings reveal that only 9.7% of its loans are exposed to the moratorium

<ul><li><keyword id="151330" type="COMPANY" weightage="20" keywordseo="Bank-Nifty">Bank Nifty</keyword>, the index of India's top banking stocks, is down 7% for the week hours before the trading on Friday concluded.</li><li>IndusInd Bank topped the list of weekly losers with a cut of nearly 20%.</li><li>Fitch estimates that a total of ₹5.5 trillion, about 5.7% of India's total outstanding loans, may witness defaults due to the economic stress dealt by the COVID-19 pandemic. </li><li>The Reserve Bank of India brought the interest rates down for the fifth time in a year to 4% now, the lowest since 2000.</li></ul>Bank Nifty, the index of India's top banking stocks, is down 7% for the week hours before the trading on Friday concluded. IndusInd Bank topped the list of weekly losers with a cut of nearly 20%. Shareholders of Indian banks are dumping their stock fearing a fresh surge in loan defaults as ₹2 in every ₹5 is lent to sectors like <a href="https://www.businessinsider.in/business/news/from-spicejet-to-oyo-to-mahindra-all-want-msme-tag-for-partners/articleshow/75821961.cms" data-type="tilCustomLink" target="_blank">tourism, hotels, and restaurants</a>, which are part of the medium-to-high-risk segments in the post-COVID world. The sell-off in banking stocks escalated on Friday (May 22) despite <a href="https://www.businessinsider.in/personal-finance/news/interest-payments-on-home-loans-car-loans-and-others-extended-by-another-three-months-by-rbi/articleshow/75884387.cms" data-type="tilCustomLink" target="_blank">the fifth cut in benchmark interest rates</a> in a year by the Reserve Bank of India. The <keyword id="43352" type="PERSON" weightage="20" keywordseo="Repo-rate">repo rate</keyword>, the interest that the central bank charges for lending money to banks, is now at 4%, the lowest since 2000. <div type="image" title="interest rates" msid="75884429" hostid="261" caption="&amp;lt;p&amp;gt;The benchmark interest rates in India have never been as low as 4% since the turn of the century.&amp;lt;/p&amp;gt;"></div> Not just that, the government also announced <a href="https://www.businessinsider.in/finance/news/india-puts-a-pause-on-new-bankruptcy-cases-for-a-year-and-other-changes-that-will-cap-the-rise-in-bad-loans/articleshow/75785508.cms" data-type="tilCustomLink" target="_blank">a pause on classifying loan defaults as bad loans</a>, and initiating new insolvency cases, for the next one year due to the debilitating impact of COVID-19 pandemic on the economy. However, none of these measures were good enough for the markets. <div type="Article" hostid="261" msid="75883216" title="DMart's quarterly sales may fall 25% but the shares are already up 35% ⁠— the retailer is now bigger than Maruti, Nestle and HCL Tech" mstype="2" mssubtype="0"></div> These are the top losers on the Bank Nifty this week: <table style="width: 188pt;"> </colgroup> <tbody><tr> <td class="xl63" style="height:15.0pt;width:95pt">Stock </td> <td class="xl63" style="border-left-width: initial; border-left-style: none; width: 93pt;">This week</td> </tr> <tr> <td class="xl63" style="height: 15pt; border-top-width: initial; border-top-style: none;">IndusInd Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-19.19%</td> </tr> <tr> <td class="xl63" style="height: 15pt; border-top-width: initial; border-top-style: none;">Federal Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-14.63%</td> </tr> <tr> <td class="xl63" style="height: 15pt; border-top-width: initial; border-top-style: none;">Axis Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-13.28%</td> </tr> <tr> <td class="xl63" style="height: 15pt; border-top-width: initial; border-top-style: none;">RBL Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-11.29%</td> </tr> <tr> <td class="xl63" style="height: 15pt; border-top-width: initial; border-top-style: none;">Bank of Baroda</td><td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-9.98%</td></tr></tbody></table> The stocks look cheap as the Bank Nifty has already lost over 46% this year so far, but as ICICI Securities put it in a report dated May 13, "valuations are tempting but the risks outweigh rewards." Indian banks had barely cleaned up the massive pile of unpaid loans from the country’s corporates. The total non-performing assets (NPA) in India was estimated at over ₹9 lakh crore at the end of September 2019. The coronavirus pandemic is spiralling into an economic crisis that may bring a fresh wave of defauts ⁠— this time from the small borrowers. Fitch estimates that <a href="https://www.indiainfoline.com/article/news-top-story/banking-sector-beginning-new-npa-cycle-in-aftermath-of-covid-19-ind-ra-120052200246_1.html" data-type="tilCustomLink" target="_blank">a total of ₹5.5 trillion, about 5.7% of India's total outstanding loans,</a> may witness defaults due to the economic stress dealt by the COVID-19 pandemic. The report also added that every government-owned bank in India will need an additional capital of ₹30,000 crore to ₹55,000 crore. In an exclusive chat with <a href="https://twitter.com/BiIndia/status/1248562052337033216">Business Insider on April 10</a>, Vijay Shekhar Sharma, the billionaire founder of Alibaba-backed Paytm, said this will be the ‘biggest nightmare’ for India in 2020. With the <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> extending the <keyword id="117489" type="PERSON" weightage="20" keywordseo="moratorium">moratorium</keyword> on loan repayments till August 31, it is likely that more borrowers may take the option. <div type="image" title="moratorium" msid="75885416" hostid="261" caption="&amp;lt;p&amp;gt;If more borrowers opt to defer loan repayments, it will hurt banks&amp;#39; earnings in the short term. They may earn interest on the prolonging of the loan tenure.&amp;lt;/p&amp;gt;"></div> Moreover, the chiefs of major lenders like Axis Bank and <a href="https://www.businessinsider.in/business/news/kotak-mahindra-bank-q4-profit-down-4-pc-to-rs-1952-cr/articleshow/75712873.cms" data-type="tilCustomLink" target="_blank">Kotak Mahindra Bank</a> have already said that they will be more cautious while making loans hereon, and that will have an impact on future earnings of the banks too. Even the corporate lobby says that the interest rate cuts are good, but not good enough. "...a new phenomenon is visible," ASSOCHAM Secretary General Mr Deepak Sood said. "Along with the risk aversion by the banks to lend, even the borrowers are apprehensive about increasing debts on their balance sheets in the face of a grave economic situation... Under such circumstances, restructuring of debts on a wider scale and a willingness to share the grave consequences of the global pandemic are essential." All in all, the business environment for banks seems to fraught with risks and investors don't have the appetite for it. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/personal-finance/news/interest-payments-on-home-loans-car-loans-and-others-extended-by-another-three-months-by-rbi/articleshow/75884387.cms?upache=2">No EMI payments for six months as RBI extends moratorium on loans repayments till August 31</a> <a href="https://www.businessinsider.in/finance/news/yes-bank-share-price-net-loss-and-drop-in-deposits-post-q4-earnings/articleshow/75590798.cms" data-type="tilCustomLink" target="_blank">Yes Bank fears more deposits may disappear when COVID-19 moratorium ends and people start repaying loans</a> <a href="https://www.businessinsider.in/business/corporates/news/axis-bank-q4-earnings-show-bad-loans-ease-but-ceo-amitabh-chaudhry-maintains-caution/articleshow/75429938.cms" data-type="tilCustomLink" target="_blank">Axis Bank CEO says lending will be 'cautious' despite easing stress from bad loans in the latest fourth quarter</a>

India's banking stocks are down 7% this week despite a rate cut by RBI and a pause on new bad loans and bankruptcies

<ul><li>Yes Bank reported a net loss of ₹3668.33 lakh during the fourth quarter. </li><li>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. </li><li>The bank expects deposits to erode further once the moratorium lifts and its customers withdraw their funds to pay off loans. </li><li>Over the last year, <keyword id="8876861" type="UNKNOWN" weightage="20" keywordseo="Yes-Bank-deposits">Yes Bank deposits</keyword> half shrunk to half their original size. </li></ul>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. <div type="image" title="YES BANK" msid="75590776" hostid="261" caption="&amp;lt;p&amp;gt;Yes Bank share price over the last three months&amp;lt;/p&amp;gt;"></div> 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. <div type="Article" hostid="261" msid="74547669" title="The fall of Yes Bank founder Rana Kapoor from a billion dollars to facing a ₹4300 crore investigation" mstype="2" mssubtype="0"></div> <div type="image" title="snapshot-1588820341625" msid="75590811" hostid="261" caption="&amp;lt;p&amp;gt;Yes Bank&amp;#39;s term deposits over the last five quarters&amp;lt;/p&amp;gt;"></div> “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. <div type="Article" hostid="261" msid="75570240" title="The downgrade of SBI, Bank of Baroda, and ICICI Bank is proof that the 'biggest nightmare' for India's financial sector is becoming real" mstype="2" mssubtype="0"></div> 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 <keyword id="8878575" type="UNKNOWN" weightage="20" keywordseo="yes-bank-scam">Yes Bank scam</keyword> 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. <div type="Article" hostid="261" msid="74667132" title="Yes Bank shares soar after Moody's upgrade and RBI's assurance" mstype="2" mssubtype="0"></div> <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Subscription amount (cr) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Shares (%) </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">SBI </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 6,050 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">48.2 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICICI Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1,000 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Ltd. </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1,000 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 600 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.8 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Mahindra Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 500 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.6 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bandhan Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 300 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.4 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Federal Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 300 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.9 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IDFC First Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 250 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.7 </td></tr></tbody></table> See also: <a href="https://www.businessinsider.in/business/corporates/news/yes-bank-earnings-tomorrow-will-refresh-memories-of-turmoil-before-covid-19-hit-the-economy/articleshow/75554780.cms">Yes Bank's share price slips 5% ahead of earnings as COVID-19 uncertainty continues to loom after scam</a> <a href="https://www.businessinsider.in/finance/news/sbi-indusind-bank-bank-of-baroda-icici-bank-downgraded-as-paytms-paytms-vijay-shekhar-sharma-warned/articleshow/75570240.cms">The downgrade of SBI, Bank of Baroda, and ICICI Bank is proof that the 'biggest nightmare' for India's financial sector is becoming real</a> <a href="https://www.businessinsider.in/india/news/ed-files-charge-sheet-against-rana-kapoor-in-yes-bank-case/articleshow/75575749.cms">ED files charge sheet against Rana Kapoor in Yes Bank case</a>

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

<ul><li>Credit Suisse estimates that Indian banks will shore up $20 billion in capital to meet the demands of their debt.</li><li>Kotak Mahindra Bank already on the ball with a QIP worth ₹7,100 crore ($940 million) announced today.</li><li>Axis Bank is also reportedly in talks with Carlyle to raise $1 billion in funding.</li></ul>Unwilling to take risks and facing rating downgrades, India’s banks, including the biggest State Bank of India (SBI), and private lenders like Axis Bank, are on the hunt for fresh capital. However, most of it will go into filling up a massive hole left by bad loans. For other non-banking firms in the financial sector, refinancing isn’t going to come easy. Credit Suisse estimated that Indian banks will need to shore up nearly $20 billion in capital to hedge against upcoming risks as the coronavirus pandemic continues to bear heavily on the economy. More than half of the requirement, an estimated $13 billion, is going be from public sector banks, according to the investment bank. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596155/?utm_source=embed&utm_campaign=visualisation/2596155' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> “We estimate that 70% of the Indian financial system’s lending capacity is now constrained,” the report said estimating that 25% of the credit lies with public sector banks — excluding the State Bank of India (SBI) — are is yet to be free of the prior burden of non-performing assets (NPAs). Banks need money to repay about $2.9 billion worth bonds that are up for repayment in the next 12 months. “We estimate ₹2.5 trillion ($33 million) of debt is already downgraded to ratings that are likely to make refinancing challenging,” the financial services company said in its report. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596276/?utm_source=embed&utm_campaign=visualisation/2596276' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Kotak Mahindra Bank launches its QIP Kotak Mahindra Bank is already on the ball with the launch of its ₹7,100 crore ($940 million) qualified institutional placement (<a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/c2ab6c3e-ef08-4347-9281-422fd21c483b.pdf">QIP</a>). This allows the private lender to raise capital from domestic markets without the need to submit at pre-issue filings with the market regulator, the Securities and Exchange Board of India (SEBI). The equity shares will be issued at a discount of 5% on the floor price, which is close to ₹1,148 per share. Kotak Mahindra Bank's share price rallied by more than 5% on May 27. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596375/?utm_source=embed&utm_campaign=visualisation/2596375' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Axis Bank is looking to raise $1 billion Another private player, Axis Bank, is also looking to raise $1 billion to private equity firm Carlyle, according to <a href="https://economictimes.indiatimes.com/markets/stocks/news/axis-bank-board-to-meet-on-apr-25-to-consider-fundraising/articleshow/68598582.cms?from=mdr">PTI</a>. “The brass seems to be warming up to the idea of another deep-pocket marquee investor in recent weeks,” a source told the publication. An investment of this size will be that Carlyle will own between 5% to 8% stake in Axis Bank. Its share price jumped by over 13% on May 27. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596439/?utm_source=embed&utm_campaign=visualisation/2596439' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> IndusInd Bank’s Hinduja family wants to raise its stake Simultaneously, IndusInd Bank is reportedly in talks with Japan’s Nippon Life to battle the growing threat of bad loans and ratings downgrades. Like Uday Kotak, the owners of IndusInd Bank — the Hinduja family — is also looking to <a href="https://www.livemint.com/companies/news/indusind-bank-clarifies-on-fund-raising-reports-11585905610222.html">increase their stake</a> to 26% instead of the RBI’s mandated 15% in this time of crisis. Following in the steps of other banks, IndusInd Bank's share price was up by 5.8% on May 27. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596481/?utm_source=embed&utm_campaign=visualisation/2596481' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Smaller players like RBL Bank, AU Small Finance Bank, IDFC First, Yes Banks and others are also looking to go down the QIP-route for undisclosed amounts to raise capital and shore up their balance sheets. They account for 8% of the credit in the Indian financial system and have been bearing the brunt of deposit outflows and liquidity constraints, according to Credit Suisse. It’s not just banks Banks are only a part of the liquidity crunch in the economy. Non-banking financing companies (NBFCs) have been pulling back on credit since the IL&amp;FS crisis of 2018. And, with mutual funds now frowning upon investing in NBFCs, they now have limited access to funding from the domestic debt market, according to Credit Suisse. “Asset Liability Management (ALM) challenges for NBFCs are turning more severe with access to funding differentiated and a 6-month moratorium on 30% to 70% of loans,” said the report. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596549/?utm_source=embed&utm_campaign=visualisation/2596549' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Even though the Indian government announced multiple measures to try and help the sector, the benefits are likely to be limited. “The government has announced a ₹300 billion special liquidity window for purchasing the securities of NBFCs. However, the scheme is for short-term paper, and available to investment grade entities, which impacts its effectiveness,” said Credit Suisse. “Our analysis shows that around ₹640 billion of borrowings for 'AA'-and-below-rated NBFCs are coming up for refinancing from April to December 2020,” it added, pointing out that sell-downs and external commercial borrowings (ECBs) are now the key avenues for them to meet their refinancing needs. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/mukesh-ambani-may-not-be-done-selling-stake-in-jio-even-after-one-sixth-of-the-telco-is-already-out-of-his-hands/articleshow/75892898.cms">Mukesh Ambani may not be done selling stake in Jio even after one-sixth of the telco is already out of his hands</a> <a href="https://www.businessinsider.in/business/corporates/news/airtel-share-price-target-as-africa-unit-nears-a-billion-dollars-in-revenue/articleshow/75970641.cms">Airtel’s Africa unit is now a nearly-billion dollar business where every user pays 40% more than the one in India</a> <a href="https://www.businessinsider.in/tech/enterprise/news/three-ways-tcs-infosys-and-other-it-giants-in-india-are-trying-to-cut-costs-but-its-not-going-to-increase-their-profitability/articleshow/76021884.cms">Three ways TCS, Infosys and other IT giants in India are trying to cut costs — but it’s not going to increase their profitability</a>

Indian lenders like SBI, Axis Bank and others need $20 billion⁠ in capital— most of it will go into filling up NPA holes

<ul><li>The Yes Bank crisis could have a cascading effect on the stock markets. </li><li>Businesses with deposit accounts at Yes Bank may not be able to make payments on loans taken from other financial institutions. </li><li>Mutual funds have a total exposure of ₹2,848 crore, and most are already side-pocketing the risk. </li></ul>As the Yes Bank crisis continues to unfold, not everyone is on board with the Reserve Bank of India’s (RBI) scheme to restructure the troubled bank. Mutual funds stand to lose millions and the moratorium limiting withdrawals to ₹50,000 could spell trouble for companies who are using the bank’s services. “With large-sized withdrawals disallowed, a number of companies availing of facilities from Yes Bank could face disruption in their operations, which may constrain their ability to service financial obligations on time,” said global rating firm CRISIL in a statement. As the fourth largest private sector bank in the country, Yes Bank has an asset book of more than ₹3.45 crore and deposits exceeding ₹2 lakh crore. CRISIL believes that the moratorium has “material implications” for companies using Yes Bank for loans, deposits, bonds and other instruments. How Yes Bank crisis could affect other banks The fall out from funds being stuck at the troubled bank could result in companies defaulting on their loans from other financial institutions since their payments are linked to deposit accounts at Yes Bank. It may further aggravate liquidity issues for the already cash-starved non-banking lenders, according to a report by <a href="https://www.businessinsider.in/business/news/yes-bank-reconstruction-may-further-aggravate-liquidity-issues-for-nbfcs-report/articleshow/74579814.cms">Fitch Ratings.</a> “There could also be a marginal uptick in delinquencies in retail loans of banks and non-banks,” said CRISIL. Companies using Yes Bank’s letters of credit and bank guarantees to leverage their businesses may also have to rethink their plans. “There are also some securitisation transactions of other originators where Yes Bank is a counterparty - either as the bank where credit enhancement in the form of fixed deposits is being maintained, or as the collection and paying agent for the transaction,” said CRISIL. NSE Clearing (NCL) and India Clearing Corporation (ICCL), the biggest clearing firms in the country, have told members that any existing benefit toward bank guarantees and fixed deposit receipts issued by Yes Bank were to be squared off by Wednesday, March 11. “The RBI decision has a cascading effect on trading members and their clients at large since they may not be able to cover their positions from their own funds,” Association of National Exchanges (ANMI) president Vijay Bhushan told <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-bank-fds-bank-guarantees-no-longer-valid-traders-have-to-arrange-funds-by-wednesday/articleshow/74545067.cms">ET.</a> Bonding over bonds Nearly 32 mutual funds are exposed to Yes Bank’s debt with a total exposure of ₹2,848 crore. Many of them are AT 1 (Additional 1) bonds, set to be written off completely. Mutual funds owned by Nippon, Kotak, and Franklin <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-banks-at1-bond-write-down-these-mfs-pension-funds-stand-to-lose-most/articleshow/74555609.cms">have the most to lose</a>. After news broke of RBI superseding Yes Bank’s board, rating agency ICRA downgraded Yes Bank’s debt instruments to a “D” — below investment grade. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td colspan="2" style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mutual fund owners with the most to lose from RBI’s scheme to restructure Yes Bank: </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mutual fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Loss </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nippon Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2,500 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Franklin Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹590 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Barclays Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹246 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹130 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Industries </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹100 crore </td></tr></tbody></table> Nippon India Mutual Fund, which has the largest exposure, was the first to side-pocket the risk. The move prevents distressed assets, like Yes Bank, from damaging returns generated from better-performing assets. PGIM India Mutual Fund, UTI Mutual Fund, Franklin Templeton Mutual Fund and Baroda Mutual Fund <a href="https://www.bloombergquint.com/business/yes-bank-news-two-more-mutual-funds-side-pocket-exposures-to-yes-bank-bonds">soon followed suit</a>. Axis Trustee Services, on the other hand, filed a petition to delay any action until its bond investors have had the time to review its impact. It asks the court to give enough time for bond investors to review the proposed plan. <div type="twitter" handle="LiveLawIndia" handlename="Live Law" image="http://pbs.twimg.com/profile_images/897707258334916608/nMQWwGlo_normal.jpg" favoritecount="11" retweetcount="6" status="Axis Trustee Services Ltd, a debenture trustee of #Yes_Bank , on Monday petitioned the Bombay High Court against th… https://t.co/pE53lzxTwl" createdat="1583913099000" id="1237647359091195905"></div>

 According to Axis, the proposal to write off the value of over ₹8,000 AT-1 bonds is unjustified and goes against global best practices. It argues that the scheme put forth by the RBI gives preference to Yes Bank promoters despite their shady record and mismanagement of resources — which landed the bank in hot water, to begin with. The possibility of the moratorium being cut short The proposed restructuring of Yes Bank includes recapitalisation of ₹20,000 crore with equity contribution and bulk deposits of around ₹30,000 crore by multiple-state owned banks. “If equity commitments are in place and CD funds flow in, the moratorium may be lifted by the end of the week,” RBI administrator of Yes Bank told reporters on March 10. CRISIL believes that the challenges in the face of the Yes Bank crisis are likely to be temporary, since they are a direct result of a crunch in liquidity and cash flow. Nonetheless, the temporary crunch will result in systemic risk until the moratorium is resolved — like the cost of borrowing and capital-raising becoming tougher for other banks Sources told <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/under-the-scanner-rbi-to-check-if-yes-bank-auditor-bsr-had-raised-red-flags/articleshow/74568396.cms">ET</a> that RBI is checking with Yes Bank’s auditor — BSR &amp;Co, which is a part of KPMG India — whether or not the proposal for SBI to buy a stake in Yes Bank will have any “material impact” on the existing accounts with the bank. Another one bites the dust The repeated incidents of large — supposedly ‘too big to fail’ — companies are becoming increasingly rampant. Last September, the Mumbai-based Punjab and Maharashtra Cooperation (PMC) Bank faced a similar crisis. It was placed under an RBI administrator for six months after under-reporting of loans going bad. However, banks aren’t the only ones going down. The collapse of Jet Airways and Cox &amp; Kings left many investors — and travelers — stranded. Even stockholders in IL&amp;FS and DHFL saw their money disappear overnight due to mismanagement, fraud and corruption within the companies. More than just getting Yes Bank on its feet, the central government and the RBI will have to address the trust deficit that now plagues the market. See also: <a href="https://www.businessinsider.in/finance/news/indias-largest-bank-stock-sees-the-sharpest-fall-in-over-7-years-investors-want-to-say-no-to-yes-bank/articleshow/74504449.cms">India's largest bank stock sees the sharpest fall in over 7 years — investors want to say 'no' to Yes Bank</a> <a href="https://www.businessinsider.in/finance/news/finance-minister-assures-employment-and-salary-at-yes-bank-at-least-for-one-year/articleshow/74514015.cms">Finance Minister assures employment and salary at Yes Bank at least for one year</a> <a href="https://www.businessinsider.in/finance/news/yes-bank-share-price-falls-10-after-rbi-limits-withdrawals/articleshow/74504094.cms">Yes Bank share price nose dives 72% after RBI limits withdrawals</a>

Yes Bank crisis and its domino effect on bonds, mutual funds and other corporate defaults

<ul><li>The private bank on the brink of collapse has been saved by the government who forced a bunch of peers to invest in Yes Bank.</li><li>Global investment bank Nomura, which suspended its rating on the bank, said that Yes Bank will remain on life support for a long time.</li><li>Yes Bank's capital levels are weak, there has already been a run on the deposits and it may get worse once the government removes the withdrawal limit on March 18, warns Nomura.</li><li>There are at least 3 broad reasons why people buying Yes Bank shares for a bargain may not gain in the long run.</li></ul>The private bank on the brink of collapse has been saved by the government, and the regulator Reserve Bank of India (RBI), who forced a bunch of its peers to invest in Yes Bank after limiting withdrawals by depositors. The share price of Yes Bank rebounded by over 45% on Monday (March 16) as bargain hunters lapped up the stock. Meanwhile, the RBI announced that the limit on withdrawing deposits will be lifted on March 18 at 6 pm. Governor Shaktikanta Das appealed to investors to avoid panic withdrawals. <div type="Youtube" id="YcdUt1RV2SQ" title="Governor's Press Conference" thumbUrl="https://i.ytimg.com/vi/YcdUt1RV2SQ/mqdefault.jpg"></div>

 However, global investment bank Nomura, which suspended its rating on the bank, said that Yes Bank will remain on life support for a long time citing at least three broad reasons for its call. 1. Operating performance significantly deteriorated 
	
	
	
 
 <div type="image" title="India Yes Bank" msid="74653652" hostid="261" caption="&amp;lt;p&amp;gt;Depositors stand in queue for withdrawals outside Yes bank in Mumbai, India, Friday, March 6, 2020. Panicked depositors rushed to branches of a cash strapped private Yes Bank to withdraw money as the central bank placed it under a moratorium and superseded its board and it capped deposit withdrawals at rupees 50,000 (USD$ 705) per account for a month.Photo/Rajanish Kakade)&amp;lt;/p&amp;gt;"></div>











 Yes Bank reported an operational loss of ₹6.4 crore in the latest third quarter ended December 2019 after additional loans worth nearly ₹24,600 crore (over $3.3 billion) turned bad. Even before the RBI stopped withdrawals, many wary depositors had taken out their money ⁠— at least one in every five rupees deposited in the bank had been withdrawn between October and December 2019. There may be more withdrawals , further hurting the bank, once the RBI moratorium is lifted on March 18. 2. Asset quality deteriorated sharply 
	
	
 
 <div type="image" title="Mumbai: Yes Bank founder Rana Kapoor being taken to court for a hearing in conne..." msid="74653962" hostid="261" caption="&amp;lt;p&amp;gt;Court has extended Yes Bank founder Rana Kapoor&amp;#39;s custody to March 20 in connection with money laundering charges, in Mumbai.Photo/Mitesh Bhuvad)&amp;lt;/p&amp;gt;"></div>









 Gross non-performing assets (NPA), simply put the bad loans, rose sharply to 18.9%. Again, one in every five rupees lent by the bank are unlikely to be repaid. The bank further projected another 5% of the loans may go from being 'stressed' to 'bad', which means it has to be written off. "While the bank did ramp up its provision cover to 73% but with balance-sheet size shrinking, the left-over book will remain highly toxic, making any recovery in profitability very difficult, in our view," Nomura said in report on Yes Bank on March 16. 3. Shareholders can't exit if things go awry The government's rescue plan that includes investments from peers like State Bank of India, ICICI Bank, HDFC Limited, and Axis Bank among others will reduce stake of existing shareholders. When shares are issued to new investors, the stake that existing shares represent fall. The amount of capital Yes Bank has, even after the rescue, is still very little— the tier-1 capital is at 7.6%. That means, it may need more investment in the future, and that would mean more stake dilution for the investors. <table style="width: 362pt;"> </colgroup> <tbody><tr> <td class="xl65" style="height:15.0pt;width:124pt">Bank </td> <td class="xl66" style="border-left-width: initial; border-left-style: none; width: 139pt;">Investment in Yes Bank</td> <td class="xl67" style="border-left-width: initial; border-left-style: none; width: 99pt;">Share price reaction</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">State Bank of India</td> <td class="xl63" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹7,250 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-7.71%</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">ICICI Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹1,000 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-10.31%</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">HDFC</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹1,000 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-10.10%</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">Axis Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹600 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-10.18%</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">Kotak Bank</td> <td class="xl63" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹500 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-6.13%</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">Federal Bank</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹350 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-8.10%</td> </tr> <tr> <td class="xl68" style="height: 15pt; border-top-width: initial; border-top-style: none;">Bandhan Bank</td> <td class="xl63" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹300 crore</td> <td class="xl69" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-13.91%</td> </tr> <tr> <td class="xl70" style="height: 15.75pt; border-top-width: initial; border-top-style: none;">IDFC First Bank</td> <td class="xl71" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹250 crore</td> <td class="xl72" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-11.60%</td> </tr></tbody></table> Making matters worse, investors holding over 100 shares of Yes Bank are locked in — 75% of shares held — for at least three years. If there is more dirt that is unveiled in the days to come, even if an investor doesn't have the appetite for that kind of risk, he will have bear the brunt of it. SEE ALSO: <a href="https://www.businessinsider.in/business/news/fpis-institutional-investors-flag-concerns-over-yes-bank-trading-curbs-without-notice/articleshow/74651675.cms" data-type="tilCustomLink" target="_blank">Yes Bank's trading curbs baffle investors who were looking to gain from the sharp spike</a> <a href="https://www.businessinsider.in/thelife/news/yes-bank-founder-rana-kapoor-money-laundering-charges-international-hotels-and-bungalows-in-delhi/articleshow/74644767.cms" data-type="tilCustomLink" target="_blank">Rana Kapoor's hotels, bungalows, flats and paintings — everything that Yes Bank founder is suspected for buying with kickbacks</a> <a href="https://www.businessinsider.in/business/news/anil-ambani-questioned-by-ed-for-his-loans-from-trouble-laden-yes-bank/articleshow/74645330.cms" data-type="tilCustomLink" target="_blank">Anil Ambani questioned by ED for his loans from troubled YES Bank</a>

You Searched For "Axis Bank Moratorium" and got 7 results

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