Causes of Yes Bank crisis:
- Loan spree
- In the last five years, Yes Bank went on a loaning spree. Its total advances rose by 334% between FY14 and FY19, the highest rise among comparable banks in the period.
- Bad loans multiply
- Many borrowers started defaulting. The bank’s Gross NPA% (loans overdue for >90 days) zoomed to 7.39% as of Sept. ‘19, the highest among comparable banks.
- Low provisions
- While bad loans piled up, Yes Bank did not make enough provisions in its profits. Its Provision Coverage Ratio in FY19 was 43.1%, the lowest among comparable banks. RBI says a PCR of >70% is desirable.
- Confidence drop
Amidst the loan mess, customers withdrew large amounts, resulting in the credit-deposit ratio of Yes Bank crossing 100% (it lent more than what it received) in FY18, 19.
- Poor profitability
The loan spree & high NPA meant poor profitability, gauged by Yes Bank’s sinking Return on Assets (RoA) (RoA = net income/ total assets).
Final Destination for Haryana PSC Notes and Tests, Exclusive coverage of HPSC Prelims and Mains Syllabus, Dedicated Staff and guidence for HPSC Exams HPSC Notes brings Prelims and Mains programs for HPSC Prelims and HPSC Mains Exam preparation. Various Programs initiated by HPSC Notes are as follows:-
- HPSC Mains Tests and Notes Program
- HPSC Prelims Exam 2024- Test Series and Notes Program
- HPSC Prelims and Mains Tests Series and Notes Program
- HPSC Detailed Complete Prelims Notes