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<ul><li>The <keyword id="6354977" type="ORGANIZATION" weightage="20" keywordseo="Supreme-Court">Supreme Court</keyword> has rejected an order from the <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> which gives banks a 180-day period for the resolution of <keyword id="142154" type="PERSON" weightage="20" keywordseo="bad-loans">bad loans</keyword>. As a result, around 75 large borrowers will also be let off the hook. </li><li>If the verdict had gone against them, then banks would have had to provision assets against ₹2.4 trillion worth of bad loans. </li><li>The rationale behind the RBI’s February 12th circular was to tighten the noose on cash-strapped companies and force banks to account for bad loans immediately.</li></ul> The Supreme Court has rejected an order from the RBI which gives banks a 180-day period for the resolution of bad loans. As a result, around 75 large borrowers will also be let off the hook. With the verdict, India’s banks won’t have to categorise around <a href="https://www.livemint.com/industry/banking/banks-risk-adding-25-billion-in-power-sector-npas-on-supreme-court-decision-1551845161043.html">₹1.8 trillion</a> worth of loans to 34 coal-based thermal power plants as “non-performing”. The relief also extends to <a href="https://economictimes.indiatimes.com/industry/energy/power/75-firms-have-debt-of-rs-2-24-lakh-cr-petitioners/articleshow/68658771.cms">₹840 billion</a> worth of loans to companies in other sectors such as sugar, shipping and infrastructure. If the verdict had gone against them, then banks would have had to provision assets against these loans. The verdict comes more than a year after the RBI released <a href="https://www.rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=11218">a circular </a>on February 12th, 2018 that mandated banks to recognise loans of at least ₹50 million as having gone bad even in the event of a one-day default. Further still, the circular gave them not more than 180 days to approach a <keyword id="43550" type="EVENT" weightage="20" keywordseo="Bankruptcy">bankruptcy</keyword> tribunal for the resolution of said loan if the exposure was more than ₹20 billion. The rationale behind the circular was to tighten the noose on cash-strapped companies and force banks to account for bad loans immediately. It did lead to a dramatic reduction in defaults, as loans were borrowers did not pay installments on time fell by <a href="https://www.livemint.com/Industry/4qEIqln9QsZYsMBsQPLtlK/Large-borrowers-fall-in-line-after-RBI-one-day-default-norm.html">60% to ₹551 billion</a> between June and September 2018. However, the order ran into an obstacle as power firms, along with shipping companies and sugar and textile producers, <a href="https://www.livemint.com/Industry/C8sPT0Q75jFg0ZXfHdzJ4H/Supreme-Court-provides-interim-relief-to-stressed-power-firm.html">contested the one-day default norm </a>and 180-day resolution period. The companies in the aforementioned sectors were eventually <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/rbis-deadline-for-bankrupt-cos-supreme-court-stays-insolvency-proceedings-against-defaulters/articleshow/65776630.cms">granted interim relief </a>in September 2018 pending a full hearing. The interim relief was aimed at helping banks restructure and offload their loans to struggling companies. Throughout the past year, the RBI had <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/how-rbis-feb-12-circular-changed-the-way-banks-dealt-with-stressed-assets/articleshow/67920150.cms">refused to dilute the circular</a>, maintaining its necessity in cleaning up the banking sector. SEE ALSO: <a href="https://www.businessinsider.in/indias-central-bank-just-gave-the-countrys-small-businesses-a-one-time-breather-from-some-of-their-bad-loans-but-with-a-few-conditions/articleshow/67346902.cms">India’s central bank just gave the country’s small businesses a one-time breather from some of their bad loans — but with a few conditions</a> <a href="https://www.businessinsider.in/miscellaneous/10-landmark-judgements-indias-supreme-court-passed-in-2018/slidelist/67254190.cms">10 landmark judgments India’s Supreme Court passed in 2018</a>

India's Supreme Court order against the RBI will be a huge relief for 75 borrowers with loans worth over ₹2.4 trillion

<ul><li>On Feb 7th, the <keyword id="6355809" type="UNKNOWN" weightage="20" keywordseo="nclt">NCLT</keyword> ordered a forensic <keyword id="6354677" type="DEFINITION" weightage="20" keywordseo="Audit">audit</keyword> against <keyword id="139545" type="COMPANY" weightage="20" keywordseo="Viceroy-Hotels">Viceroy Hotels</keyword>, the owner of two <keyword id="1880913" type="COMPANY" weightage="20" keywordseo="JW-Marriott-Hotels">JW Marriott hotels</keyword> in Hyderabad. </li><li>In doing so, the NCLT established a significant precedent for future cases: a 51% vote by a company’s Committee of Creditors is enough to initiate a forensic audit. </li><li> Asset Reconstruction Co (Arcil) had taken Viceroy Hotels to court over unpaid dues and wanted to initiated a forensic audit against the company.</li></ul>The Hyderabad bench of the National Company Law Tribunal (NCLT), a special body set up under the Companies Act in 2013 to oversee insolvency disputes, has <a href="https://www.business-standard.com/article/news-ians/51-vote-enough-for-forensic-audit-of-corporate-debtor-nclt-119030701147_1.html">ordered a forensic audit against Viceroy Hotels</a>, the owner of two JW Marriott hotels in Hyderabad, following pressure from Asset Reconstruction Co (India) Ltd (Arcil). In doing so, the NCLT established a significant precedent for future cases: a 51% vote by a company’s Committee of Creditors is enough to initiate a forensic audit. Arcil had taken Viceroy Hotels to court over unpaid dues of around <a href="https://www.dnaindia.com/business/report-viceroy-hotels-to-undergo-forensic-audit-as-arcil-smells-foul-play-2724838">₹5.3 billion </a>and had asked for an audit of several transactions. A forensic audit is an exhaustive review of a company’s financial accounts and fraudulent transactions and can be used as evidence in a court when prosecuting a defaulter. The NCLT specifically cited a section under the Insolvency and <keyword id="2564807" type="PERSON" weightage="20" keywordseo="Bankruptcy-Code">Bankruptcy Code</keyword> - 21(8) - which provides for a 51% approval in certain cases. The resolution professional handling the Viceroy Hotels case had originally declined the audit, explaining that a 66% approval by its creditors would be required as per Sec 28 (3) of the code, which relates to changes in the appointment or the terms of contract of auditors of the defaulting company. Only <a href="https://barandbench.com/51-required-for-initiating-forensic-audit-of-corporate-debtor-nclt/">59.2%</a> of the creditors had voted in favour. The NCLT then had to determine whether a forensic audit required a 66% vote or not. It concluded that a forensic audit did not equate to “changing the terms of auditors” and hence, didn’t require a 66% approval. By clarifying this, the NCLT’s ruling will make it a lot easier for creditors to initiate forensic audits against large loan defaulters. SEE ALSO: <a href="https://www.businessinsider.in/india-amending-ibc-to-prevent-no-show-from-winning-bidders/articleshow/68180285.cms">India is tweaking its bankruptcy law to prevent successful bidders from backing out</a> <a href="https://www.businessinsider.in/indias-finance-minister-touts-the-success-of-the-countrys-recently-implemented-bankruptcy-code-but-it-still-requires-significant-improvement/articleshow/67382165.cms">India’s finance minister touts the success of the country’s recently-implemented bankruptcy code — but it still requires significant improvement</a>

A new ruling on forensic audits just gave banks more power to corner stubborn borrowers

<ul><li>The Reserve Bank of India (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>) released guidelines for a restructuring scheme for the stressed accounts of micro, small and medium-sized enterprises (<keyword id="6358354" type="UNKNOWN" weightage="20" keywordseo="MSME">MSME</keyword>). </li><li>The scheme will only be applied to accounts with an outstanding value of ₹250 million or less. In addition, a loan, whether it is in default or not, has to remain classified as “standard” as of 1 January 2019 to be eligible for restructuring. </li><li>The program was a key demand of the central government, which has been looking to give a boost to the country’s small businesses. </li><li>Separately, the RBI announced earlier this week that the overall non-performing asset ratio, which is a proportion of <keyword id="142154" type="PERSON" weightage="20" keywordseo="bad-loans">bad loans</keyword> to all loans, in the banking sector declined for the first time since 2015.</li></ul>In a move that has been in the works for a while, the Reserve Bank of India (RBI) released <a href="https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11445&amp;Mode=0">guidelines </a>for a restructuring scheme for the stressed accounts of micro, small and medium-sized enterprises (MSME). The scheme will prevent the restructured loans from being classified as “non-performing”. The scheme will only be applied to accounts with an outstanding value of ₹250 million or less. In addition, a loan, whether it is in default or not, has to remain classified as “standard” as of 1 January 2019 to be eligible for restructuring. If the account has been downgraded, then it won’t fall into the scheme. Under the one-time scheme, banks and non-banking financial entities will have until the end of the 2019-2010 financial year to restructure the eligible accounts. They will also have to incur a 5% provision charge on each restructured loan in addition to existing provisions. Finally, to avail the program, borrowers need to be GST-compliant. The program was a key demand of the central government, which has been looking to give a boost to the country’s small businesses. The issue of credit to MSMEs became a sticking point in the <a href="https://www.businessinsider.in/a-compromise-between-the-rbi-and-the-central-government-could-be-in-the-offing-as-the-board-to-central-bank-prepares-to-meet-next-week/articleshow/66619722.cms">spat between the central government and the RBI</a> towards the end of last year. Despite some hesitation at what the scheme might mean for the banking sector’s bad loan crisis, the central bank eventually relented. At <a href="https://www.businessinsider.in/after-weeks-of-tension-the-reserve-bank-of-india-gives-in-to-some-of-the-central-governments-demands-while-retaining-its-independence/articleshow/66705908.cms">the end of November</a>, it announced that it would formulate a scheme to help small businesses restructure their bad loans. The program will not only provide some relief to India’s small businesses from loans they’ve defaulted on, but will allow them further access to financing. In addition to forming the backbone of the Indian economy with regards to employment and manufacturing, small businesses are also an important vote bank. All that means is catering to the needs of small business owners will be crucial in an election year. The central government is also said to be mulling a plan to raise the minimum sales requirement for small businesses in regards to GST registration. The sales threshold, which is currently ₹2 million could be reportedly raised to <a href="https://www.livemint.com/Companies/rGAwnMFrEDmJAYpRkNqw5N/SMEs-set-to-get-GST-relief-ahead-of-2019-Lok-Sabha-elections.html">as much ₹7.5 million</a>, which will spare smaller businesses from having to comply with the requirements of the taxation policy. Separately, the RBI announced earlier this week that the overall non-performing asset ratio, which is a proportion of bad loans to all loans, in the banking sector declined for the first time since 2015, falling from 11.5% in March 2018 to 10.8% by September 2018. In its <a href="https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/0FSRDECEMBER2018DAFEDD89C01C432786925639A4864F96.PDF">Financial Stability Report</a>, which was released on 31 December, the central bank also predicted that the bad loan ratio would decline to 10.3% by the end of March 2019. SEE ALSO: <a href="https://www.businessinsider.in/after-weeks-of-tension-the-reserve-bank-of-india-gives-in-to-some-of-the-central-governments-demands-while-retaining-its-independence/articleshow/66705908.cms">After weeks of tension, the Reserve Bank of India gives in to some of the central government's demands while retaining its independence</a> <a href="https://www.businessinsider.in/indias-central-bank-chooses-to-keep-interest-rates-on-hold-unveils-a-new-pricing-policy-for-retail-and-small-business-loans/articleshow/66968094.cms">India’s central bank chooses to keep interest rates on hold, unveils a new pricing policy for retail and small business loans</a> <a href="https://www.businessinsider.in/indias-central-bank-is-moving-ahead-with-plans-to-set-up-the-countrys-first-public-credit-registry/articleshow/67226406.cms">India’s central bank is moving ahead with plans to set up the country’s first public credit registry</a>

India’s central bank just gave the country’s small businesses a one-time breather from some of their bad loans — but with a few conditions

(Image source- Reuters) <ul><li>The board of the state-owned <keyword id="6356834" type="COMPANY" weightage="20" keywordseo="indian-oil-corporation">Indian Oil Corporation</keyword> (IOC) has approved a plan to buy back a little over 3% of its total equity shares. </li><li>The fuel retailer will spend around ₹44.4 billion on the buyback plan, culminating in its largest buyback in 17 years. </li><li>The move also includes a dividend payout of ₹6,75 per share, resulting in a total payout of ₹65.6 billion. </li><li>This will result in a huge cash infusion for IOC’s shareholders, especially the central <keyword id="26362" type="ORGANIZATION" weightage="20" keywordseo="Government">government</keyword>, which holds a 54% stake in the oil firm. </li></ul>On 13 December, the state-owned Indian Oil Corporation (IOC) <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/22e1d47f-e2d1-4ec5-b78c-f27d5217edb5.pdf">announced</a> in a stock exchange filing that its board had approved a plan to buy back a little over 3% of its total equity shares. India’s largest fuel retailer will spend around ₹44.4 billion on the buyback plan, culminating in its biggest buyback in 17 years. The move also includes a dividend payout of ₹6,75 per share, resulting in a total payout of ₹65.6 billion. It will result in a huge cash infusion for IOC’s shareholders, especially the central government, which holds a 54% stake in the oil firm. However, it could add unnecessary strain to IOC’s finances. At the end of September 2018, it had total debts of <a href="https://iocl.com/download/Q2Results18-19.pdf">around ₹600 billion</a>, compared with a paltry cash balance. It remains to be seen how exactly it will fund the transaction, but it will likely incur a lot more <keyword id="44647" type="ORGANIZATION" weightage="20" keywordseo="debt">debt</keyword>. This, coupled with its <a href="https://www.firstpost.com/business/indian-oil-corps-net-debt-levels-to-rise-due-to-large-capital-expenditure-and-investment-plans-in-medium-term-fitch-4752471.html">high capital expenditure plans</a> in the medium term, could leave it a rather unviable position. The impetus behind the transaction is to help the government, acting through the the Department of Investment and Public Asset Management (DIPAM), meet its <keyword id="44532" type="PERSON" weightage="20" keywordseo="Disinvestment">disinvestment</keyword> target of ₹800 billion for fiscal 2019. It has reportedly collected 68% of that amount so far this year. The DIPAM is reportedly planning to earn as much as ₹50 billion from share buyback programmes of large state-owned enterprises energy firms like Coal India and Bharat Heavy Electricals, according to the Press Trust of India. As per a government order, all public sector enterprises with a cash balance of over ₹10 billion have to undertake share buybacks. Last week, the government also decided to sell a 52.63% stake in infrastructure financier Rural Electrification Corp (REC) to another state-run power lender, Power Finance Corporation (PFC). However, just like IOC, the issue of debt could be a problem here. PFC will have to raise a significant amount of debt to finance the purchase, a tough ask for a firm weighted down by ₹283 billion worth of gross non-performing loans. SEE ALSO: <a href="https://www.businessinsider.in/heres-why-the-indian-governments-intervention-to-stop-rising-fuel-prices-may-only-be-a-temporary-relief/articleshow/66082071.cms">Here’s why the Indian government’s intervention to stop rising fuel prices may only be a temporary relief</a> <a href="https://www.businessinsider.in/indias-reliance-is-teaming-up-with-bp-in-a-move-that-could-send-the-countrys-state-owned-fuel-giants-into-a-tailspin/articleshow/66331991.cms">India's Reliance is teaming up with BP in a move that could send the country's state-owned fuel giants into a tailspin</a> <a href="https://www.businessinsider.in/indias-government-is-asking-its-largest-oil-company-to-sell-fuel-below-global-prices/articleshow/64300993.cms">India’s government is asking its largest oil company to sell fuel below global prices</a>

India’s largest fuel retailer is undertaking its biggest share buyback since 2001 in order to help the central government meet its disinvestment target

<ul><li>On 19 October, <keyword id="47654" type="COMPANY" weightage="20" keywordseo="ArcelorMittal">ArcelorMittal</keyword>, the world’s largest <keyword id="34570" type="COMPANY" weightage="20" keywordseo="steel">steel</keyword>maker, announced that it had been selected as the preferred bidder for Essar Steel by the bankrupt company’s committee of creditors. </li><li>While the Luxembourg-based steelmaker submitted a joint bid of ₹420 billion with Japan’s Nippon Steel &amp; Sumitomo Metal, negotiations for a final price will commence shortly. </li><li>The acquisition of Essar Steel - which includes a production facility in Gujarat capable of producing 10 million tonnes of steel a year - will give ArcelorMittal a significant competitive advantage in India’s steel industry. </li></ul> India’s domestic steel giants must be on high alert. On 19 October, ArcelorMittal, the world’s largest steelmaker, <a href="https://corporate.arcelormittal.com/news-and-media/press-releases/2018/oct/19-10-2018?lang=english">announced</a> that it had been selected as the preferred bidder for Essar Steel by the bankrupt company’s committee of creditors. While the Luxembourg-based steelmaker submitted a joint bid of <a href="https://www.businessinsider.in/arcelormittal-submits-a-higher-bid-for-bankrupt-essar-steel-but-on-one-condition/articleshow/65769020.cms">₹420 billion</a> with Japan’s Nippon Steel &amp; Sumitomo Metal, negotiations for a final price will commence shortly. A decision is expected within the next few weeks. The decision caps an eight-month long saga which saw the company vy for the prized assets of Essar with Russia’s Numetal, which had to bow out of the bidding owing to its inability to pay back the outstanding dues of its affiliates, and Vedanta. The acceptance of the bid marks a win for India’s new <keyword id="43550" type="EVENT" weightage="20" keywordseo="Bankruptcy">bankruptcy</keyword> regime. The bid value represents around 85% of Essar Steel’s outstanding dues. The steelmaker was one of the 12 large non-performing accounts shortlisted for resolution by the Reserve Bank of India in June last year. Earlier this month, on 4 October, ArcelorMittal was ordered to clear the loans of its local subsidiaries first in order to be considered eligible for bidding. The two subsidiaries- Uttam Galva and KSS Petron - had outstanding loans of ₹75 billion. In response, last week, the steelmaker agreed to pay only a portion of the estimated outstanding dues of its subsidiaries- specifically <a href="https://www.businessinsider.in/arcelormittal-isnt-giving-up-on-its-bid-for-essar-steel-without-a-fight/articleshow/66257606.cms">₹45.5 billion</a>. However, the following day, which was incidentally a day before the deadline for the clearing of the loans, ArcelorMittal gave in and decided to pay <a href="https://www.livemint.com/Companies/dKKDpJF1eTazDYzsEkRd7J/ArcelorMittal-to-make-1-billion-creditor-payment-to-bid-for.html">the full amount</a>. A shakeup for the industry The acquisition of Essar Steel will give ArcelorMittal a significant competitive advantage in India’s steel industry. The debt-laden steel maker has a facility in Gujarat that is capable of manufacturing 10 million tonnes a year, making it the largest such plant in India. The complex also includes a natural gas-fuelled power plant and a dry bulk port. It also marks ArcelorMittal’s second stab at the Indian market following the failure of Uttam Galva, which it was forced to exit in order to bid for Essar Steel. The Luxembourg-based steelmaker’s big entry is expected to spur India’s domestic steelmakers, the likes of which include Tata Steel and JSW Steel, to cut costs, speed up operations and price their product offering more competitively. The company, which is owned by <keyword id="29201" type="PERSON" weightage="20" keywordseo="Lakshmi-Mittal">Lakshmi Mittal</keyword>, has a track record of buying up steel mills and turning them around by accelerating production. The acquisition of Essar Steel will enable ArcelorMittal’s expansion and eventual consolidation in the Indian market.

India’s steel industry is set for a shakeup after ArcelorMittal finally emerges as the winning bidder for Essar Steel

<ul><li>Last month, <keyword id="47654" type="COMPANY" weightage="20" keywordseo="ArcelorMittal">ArcelorMittal</keyword> raised its bid for the bankrupt steelmaker from ₹310 billion to ₹420 billion, which included an additional offer to clear the dues of its subsidiaries on the condition that its bid was accepted. </li><li>However, on 4 October, the Supreme Court directed the Luxembourg-based steelmaker to clear all its subsidiaries’ outstanding dues in order to be considered eligible for bidding. </li><li>In response, ArcelorMittal has offered to pay around ₹45.5 billion, well below its subsidaries’ estimated total dues of ₹70 billion. </li></ul>The bidding process for the <keyword id="6357251" type="COMPANY" weightage="20" keywordseo="essar-steel">Essar Steel</keyword> - which was one of the first 12 accounts identified by the RBI for resolution last year - has met with another twist. Last month, ArcelorMittal raised its bid for the bankrupt steelmaker from ₹310 billion to <a href="https://www.businessinsider.in/arcelormittal-submits-a-higher-bid-for-bankrupt-essar-steel-but-on-one-condition/articleshow/65769020.cms">₹420 billion</a>, which included an additional offer to clear the dues of its subsidiaries. This was well above <keyword id="6235176" type="ORGANIZATION" weightage="20" keywordseo="numetal">Numetal</keyword>’s ₹370 billion offer. However, ArcelorMittal’s bid was subject to one condition - it said it would only pay the outstanding loans of Uttam Galva and KSS Petron - which are estimated to be around ₹75 billion excluding interest- if its bid for Essar Steel was accepted. The company took the matter to the Supreme Court, which directed the company <a href="https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/arcelormittal-ready-to-clear-uttam-galva-kss-petron-debt-for-essar-steel-bid/articleshow/66254119.cms">earlier this month</a> to clear the loans of its subsidiaries first, despite the fact that it had sold down its stakes in them in February 2018 before the bidding process commenced. The directive extended to Numetal as well, which is also dealing with outstanding dues of its own. The the Luxembourg-based steelmaker was deemed ineligible to bid for Essar Steel in the first round earlier this year because its two aforementioned subsidiaries had defaulted on their loans. Under the rules of the Indian <keyword id="43550" type="EVENT" weightage="20" keywordseo="Bankruptcy">bankruptcy</keyword> code, wilful defaulters or entities associated with wilful defaulters cannot bid for bankrupt firm. Now, as per a letter sent last week to the Essar Steel’s creditors seen by media outlets, ArcelorMittal has agreed to pay a portion of the estimated outstanding dues of its subsidiaries- specifically ₹45.5 billion - based on its own calculations of the principal and interest owed on its subsidiaries’ loans. This includes nearly ₹40 billion worth of loans and external commercial borrowings on Uttam Galva’s books with the rest coming from KSS. If the proposal, which is still pending the approval of ArcelorMittal’s board, is accepted by the committee of creditors, then the Luxembourg-based steelmaker will no longer have to worry about the eligibility of its bid. However, it is taking a large gamble given the possibility that it could lose the bid to Numetal. The deadline for the payment of the outstanding dues is 18 October.

ArcelorMittal isn’t giving up on its bid for Essar Steel without a fight

<ul><li><keyword id="45660" type="COMPANY" weightage="20" keywordseo="Yes-Bank">Yes Bank</keyword>, which is India’s third-largest private sector lender, has lost more than half its <keyword id="6463972" type="UNKNOWN" weightage="20" keywordseo="market-value">market value</keyword> since 20 August as it deals with succession and compliance issues. </li><li>On 20 September, the <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> refused to extend the tenure of Yes Bank <keyword id="5645" type="POSITION" weightage="20" keywordseo="CEO">CEO</keyword> <keyword id="128581" type="PERSON" weightage="20" keywordseo="Rana-Kapoor">Rana Kapoor</keyword>’s term, which precipitated a dramatic <keyword id="5683" type="ENTERTAINMENT" weightage="20" keywordseo="Crash">crash</keyword> in the bank’s share price. </li><li>Following a risk review by the RBI last year, it came to light that Yes Bank had underreported ₹63.6 billion worth of non-performing loans. </li></ul>As a central banking regulator, the Reserve Bank of India can usually be counted on to support the banking sector and ensure the health of the institutions it oversees. However, in the wake of its attempts to clean up a system riddled by bad loans, it might have facilitated the downfall of some banks. Yes Bank, which is India’s third-largest private sector lender, has lost <a href="https://www.google.co.in/search?q=yes+bank+share+price&amp;oq=yes+bank+share+price&amp;aqs=chrome.0.0l6.4046j0j7&amp;sourceid=chrome&amp;ie=UTF-8">more than half</a> its market value since 20 August - from ₹910 billion to ₹438 billion-, as its share price has been in a freefall. Investors feared that the RBI would not approve the extension of the CEO Rana Kapoor’s tenure, which was set to expire on 31 August. Those fears were confirmed last week, when the RBI <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-allows-rana-kapoor-continue-as-yes-bank-md-ceo-till-january-end/articleshow/65875341.cms">refused to extend</a> Kapoor’s term, capping it at 31 January 2019, which precipitated a dramatic crash in the bank’s share price. On 20 September, when the decision was announced, the bank’s stock fell by a whopping 29% as the fears and uncertainty over its future leadership became compounded. That marks a loss of over $3 billion in market value on one day alone. Rana Kapoor founded the bank in 2004, steering it towards a dramatic rise in the ensuing decade. However, in his quest to expand the bank’s operations and loan book at a rapid pace, a number of issues were overlooked. Following a risk review by the RBI in October last year, it came to light that Yes Bank had underreported ₹63.6 billion worth of non-performing loans. There were also allegations that the bank had direct dealings with a trust run by Kapoor’s family and that it had window-dressed some of its large corporations to look financially stronger than it actually was. As the country grappled with a bad loan crisis, the RBI wasn’t in a forgiving mood. Since then, the future of Kapoor has been under intense speculation. Earlier this year, the RBI also refused to clear a three-year extension of the tenure of Shikha Sharma, the CEO of Axis Bank, as the bank dealt with its own host of bad loan calculation problems. To reassure investors and stabilise its share price, Yes Bank could have announced a successor for Kapoor this week. However, on 25 September, it wrote to the RBI again asking the regulator to reconsider its decision to trim Kapoor’s tenure, asking for an extension till September 2019. The RBI is expected to decline the bank’s request. That being said, the bank has set up a search committee to find a replacement for Kapoor. In addition to this, their immediate priority should be to draw up an effective turnaround plan in order to limit any further damage to their market cap.

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India's Supreme Court order against the RBI will be a huge relief for 75 borrowers with loans worth over ₹2.4 trillion

Dilsher Dhillon

A new ruling on forensic audits just gave banks more power to corner stubborn borrowers

Dilsher Dhillon

India’s central bank just gave the country’s small businesses a one-time breather from some of their bad loans — but with a few conditions

Dilsher Dhillon

India’s largest fuel retailer is undertaking its biggest share buyback since 2001 in order to help the central government meet its disinvestment target

Dilsher Dhillon

India’s steel industry is set for a shakeup after ArcelorMittal finally emerges as the winning bidder for Essar Steel

Dilsher Dhillon

ArcelorMittal isn’t giving up on its bid for Essar Steel without a fight

Dilsher Dhillon

One of India’s largest private banks has lost more than half its market value in 37 days

Dilsher Dhillon

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