Yes Bank is a script that fits the bill for a super-hit Hollywood movie with a difference that all ends bad in loans. The Yes Bank story began in 1999 when three successful bankers came together to float a non-banking financial company.

They were Ashok Kapur, the former country head of the ABN Amro Bank, Harkirat Singh, the former country-head of the Deutsche Bank, and third partner Rana Kapoor, former corporate finance head of the ANZ Grindlays Bank. In an interview to the Economic Times, Harkirat Singh said he accepted Rana Kapoor as the third partner only after strong recommendation of Ashok Kapur.

The three Indian promoters had 25 per cent share in the non-banking financial corporation while the rest 75 per cent were with the Rabo Bank of the Netherlands. It became the Yes Bank in 2003. It was also the same year when Harkirat Singh quit the Yes Bank over issues pertaining to influence exerted by Rabo Bank in appointment of CEO and executive chairman.

Yes Bank acquired license in 2004 and went to stock exchange with IPO (initial public offer) in 2005. The Yes Bank started making slow and steady progress in the initial years. But it received a big shock in 2008.

Ashok Kapur, then chairman, was at the Trident Hotel on 26 November 2008 when 10 Pakistani terrorists attacked Mumbai. The Trident Hotel was one of the targets of the 26/11 terror attack. Ashok Kapur died in the terrorist attack that Thursday night.

This changed the way Yes Bank would go about its business under the new leader Rana Kapoor. Ashok Kapur seemed to have fancied Rana Kapoor. This stems from the fact that he is said to have got his wife, Madhu Kapur’s sister Bindu get married to Rana Kapoor. This marriage made Ashok Kapur and Rana Kapoor not only business partners but also relatives. These ties came under scrutiny soon.

Battle for supremacy in the Yes Bank ensued. This props up from the failed attempts by Madhu Kapur in 2009 and again in 2011 to get her daughter Shagun on the board of directors.

The moves were scuttled apparently by Rana Kapoor, now in full control of the Yes Bank. During this period, Madhu Kapur’s name from major promoters was also removed in the Yes Bank’s communiqués.

In 2012, Rana Kapoor published a history of the Yes Bank but it had no reference to Ashok Kapur. The dispute settled finally in 2015 with Kapurs getting the seats on the board of directors.

The period of internal fight was also the phase when the Yes Bank went aggressive with lending. A Business Today report says that of around Rs 35,000 crore of stressed loans, most of the lendings were done in post-2008 period.

The Yes Bank gave loans to companies which were struggling in their businesses. These companies included the Anil Ambani Group of Companies, the Essel Group, the Dewan Housing Finance Corporation Ltd (DHFL) and Infrastructure Leasing and Financial Services (IL&FS). Of these DHFL and IL&FS) have collapsed and taken over by the government for restructuring.

By the time dispute between Kapoor and Kapurs settled, the steel frame of the Yes Bank had begun creaking. Global major financial services firm, the UBS in a report dated 7 July 2015, said the Yes Bank had the strongest growth in loans to potentially stressed companies.

The report read, We believe Yes Bank is most vulnerable to a prolonged weak credit cycle and consensus may not be ready for a sharp increase in the company’s credit costs. The UBS downgraded Yes Bank’s stock to a sell meaning it advised the investors to sell their stocks as the company was heading to doom.

Instead of plugging the loopholes, Rana Kapoor-headed bank moved the Securities and Exchange Board of India (SEBI) against the UBS. Following the collapse of IL&FS in 2018, the Yes Bank practically had no means to recover. But the issue with the bank was that it was not ready to admit its problems and underreported its stressed loans instead.

With the intervention of the Reserve Bank of India, it is now known, that the Yes Bank has been passing through a tumultuous period for long. In August 2018, the RBI asked the then chief executive Rana Kapoor to quit the bank by January 31, 2019 when it emerged that he could be the real problem of banking governance and source of bad loan practices.

After a brief intermediary period, the RBI appointed Ravneet Gill as the chief executive of the Yes Bank, the fourth largest private sector bank before its collapse. Ravneet Gill later disclosed that there had been large under-reported stressed assets in the Yes Bank. As a result, the Yes Bank reported its maiden loss in March 2019 quarter.

The Yes Bank has been trying to raise capital to infuse fresh lease of life in the bank. It initially planned to attract $2 billion (approximately Rs 15,000 crore) in the current fiscal. But later its board rejected a $1.2 billion (approximately Rs 9,000 crore) investment in the bank by Canadian investor SPGP Group/ Erwin Singh Braich.

The bank’s asset size stood at Rs 3.71 lakh crore at the end of June 2019.Promoters of Yes Bank — Madhu Kapur, Yes Capital (India) Pvt Ltd and Mags Finvest — hold 8.33 per cent stake in the crisis-ridden bank, as per data available on the stock exchanges.

The bank’s co-founder Rana Kapoor sold his entire stake in the bank in November 2019, when the Yes Bank had turned completely unbankable. Rana Kapoor is now in the custody of the Enforcement Directorate (ED) on charges of money laundering in connection with a case, registered by the CBI, in the Yes Bank scam.

The case is about an alleged bribe of Rs 600 crore by the DHFL Rana Kapoor family on a quid pro quo basis for Yes Bank’s investment of Rs 3,700 crore in scam-hit DHFL. More skeletons are expected to tumble out of the closets of the Yes Bank and Rana Kapoor’s world of banking.

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