The Reserve Bank of India has placed Yes Bank under moratorium. Yes Bank customers cannot make regular withdrawals of more than Rs. 50,000 a day till April 3, subject to a maximum of Rs.5 lakh.
How did Yes Bank fall into the crisis?
1. It went on a loaning spree with advances rising by 334% between Financial Year 2014 and 2019
2. Many borrowers started defaultingThe bank’s gross non-performing asset percentage, that is the percentage of loans overdue for more than 90 days, zoomed to 7.39% as of September 2019, the highest among comparable banks.
3. While bad loans piled up, the bank did not make enough provisions in its profits. Its provisions were the lowest among comparable banks
4. Customers withdrew large amounts, resulting in the credit-deposit ratio crossing 100% in 2018