India: Yes Bank Capital Injection, 2020

Salil Gupta ()
Additional contact information
Salil Gupta: YPFS, Yale School of Management, https://elischolar.library.yale.edu/journal-of-financial-crises/

Journal of Financial Crises, 2024, vol. 6, issue 3, 236-266

Abstract: In March 2020, the Reserve Bank of India (RBI) helped engineer a capital injection and restructuring of Yes Bank, India's fourth-largest private sector bank, to prevent a run on the bank and to preserve broader financial stability. On March 14, 2020, Yes Bank received a total capital injection of 100 billion Indian rupees (INR; USD 1.34 billion) in total from the State Bank of India and a group of private sector banks (HDFC, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Federal Bank, Bandhan Bank, IDFC First Bank). The government-owned SBI received a 48.2% equity stake, committing to contribute up to INR 72.5 billion. Yes Bank was placed under a 30-day moratorium under Section 45 of the Indian Banking Regulation Act of 1949, while its board was replaced and depositor withdrawals were limited to INR 50,000 (USD 663) per customer. RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman made announcements guaranteeing the safety of large banks to reassure the public. The RBI presented the rescue plan to the Indian public, including the capital injection, and helped engineer the public-private participation in the capital injection. In the full year 2021, Yes Bank's long-term credit rating was upgraded by Moody's to B3 with a stable outlook and its common equity tier 1 (CET1) ratio improved to 11.2% versus 6.3% in the previous year. In March 2022, Yes Bank reported a successful return to full year profitability for the first time since the restructuring plan in March 2020. At the end of the lock-in period in March 2023, the investors that participated in Yes Bank's capital injection had secured returns of 70% on the market value of their investments and had reduced their total ownership by over 50%.

Keywords: capital injection; Global Financial Crisis; Iceland; Landsbanki (search for similar items in EconPapers)
JEL-codes: G01 G28 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://elischolar.library.yale.edu/cgi/viewconten ... -of-financial-crises (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ysm:ypfsfc:v:6:y:2024:i:3:p:236-266

Access Statistics for this article

More articles in Journal of Financial Crises from Yale Program on Financial Stability (YPFS) Contact information at EDIRC.
Bibliographic data for series maintained by ().