A run on the deposit. A bank with almost nil liquidity to meet the demand of its deposit customers. A staggering NPA level and a complete drying up of capital (the most critical component in the banking business) -- that's the position of YES Bank, which had delayed its December quarterly result on excuse of "raising capital".
That capital never came but the moratorium by the Reserve Bank of India (RBI) and the subsequent entry of new investors and declaration of its Q3 results on Saturday have now revealed the most horrifying picture about the bank's account statement.
A RUN ON DEPOSIT
YES Bank's deposit base had fallen considerably in the last five months as the bigger depositors possibly sensed that there was something amiss since the lender was struggling to raise capital.
YES Bank's deposit base crashed from Rs 2.09 lakh crore in September 2019 to Rs 1.65 lakh crore in December 2019. It has now gone further down to Rs 1.37 lakh crore as on March 04, 2020. That shows a complete break of trust in the bank.
LIQUIDITY RATIO: BREACHING RBI MARK
YES Bank's liquidity ratio was at 114 per cent in September 2019, which was slightly higher than the minimum requirement of 100 per cent. Banks need liquidity at all times to meet any withdrawals and redemptions, etc. YES Bank's liquidity ratio first crashed to 74.6 per cent in December 2019 and later to 20.9 per cent as on March 5, 2020.
COMMON EQUITY RATIO AT ROCK BOTTOM LEVEL
YES Bank has also breached the RBI mandated Common Equity (CETl) ratio, which fell to below 1 per cent (0.60 per cent) as on December 2019 end against the apex bank requirement of 7.375 per cent. The massive fall in the capital ratio is because of the provisioning requirement for fresh NPAs (non-performing assets) added in the quarter.
MASSIVE INCREASE IN NPAs
YES Bank's gross NPAs have pole-vaulted to 18.87 per cent -- the highest in the private banking space. Many public sector banks, though, reported such high levels of gross NPAs a few years ago. The absolute NPAs figure is at staggering Rs 40,709 crore. This is alarming as there would be another set of stressed loans that will increase the bad book to unsustainable levels.