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Yes Bank Crisis: The Complete Story of Its Fall

| Published on March 7, 2020

On Thursday evening, RBI imposed a moratorium on the Yes Bank till April 3, 2020, limiting deposit withdrawals to Rs 50,000 per customer. Well, this is the only information that matters to most of the users, but for Yes Bank getting superseded by the RBI is a lot more than the cap on deposit withdrawals.

RBI has appointed former CFO of State Bank of India Prashant Kumar as the administrator of Yes Bank. CNBC-TV18 reported, Ex-CEO Ranveet Gill was politely told by the RBI-appointed administrator to leave the premises when he made an appearance at the bank’s headquarters and proceeded to go about his daily routine. Well, that quick things can turn. The man who has been MD and CEO of the bank for almost one year asked to leave the premises.

Here is the full story of Yes Bank crisis

Yes bank came into existence in 2003-2004 when it was granted a banking license by the RBI along with Kotak Mahindra bank. The bank was headed by Rana Kapoor. And in the next 10 years, the bank was ranked among India’s top five private banks.

But the story of fall started when RBI deemed Rana Kapoor’s incapable to be CEO of Yes Bank at the end of 2018.

Yes Bank sought term extension of Rana Kapoor, but RBI denied and told the board to find a new CEO till February 2019 allowing Rana Kapoor to work as CEO meanwhile. Korn Ferry advisory appointed to search for new CEO. The advisory appointed Rvaneet Gill as CEO and MD. But within a month, the bank came under the scrutiny of potential insider trading and rumours of top management revamp under Gil surfaced. SEBI reportedly started probing meanwhile the bank was starving for cash. Somehow the bank was able to meet the regulatory guidelines by the RBI but wasn’t in a good shape. And finally, on Thursday, the RBI decided to supersede the board and impose a moratorium.

Livemint reported, Even a day before RBI superseded the board and imposed a moratorium, Yes Bank CEO Ravneet Gill had taken foreign investor Tilden Park Capital Management LP to the RBI office to seek its approval for an investment in the bank. RBI asked the investor to bring in $500 million into an escrow account the next day before it gives a go-ahead for the investment. Even as Tilden Park did meet its commitment, RBI decided to go ahead and supersede the board that caught Yes Bank’s senior management by surprise.

So this was the story of the Yes Bank crisis. Hope the move by RBI and SBI’s willingness to bail out the Yes Bank will do the best both for the bank and its consumers.

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