Yes Bank crisis: Several private lenders including Yes Bank are under deep financial stress. Recently, Yes Bank landed in fresh trouble after its former director Uttam Prakash Agarwal resigned and wrote a letter to market regulator Sebi, seeking a regulatory probe into insider trading. Speaking on the ongoing Yes Bank 'deep' financial crisis, State Bank of India chairman Rajnish Kumar said YES Bank ‘will not be allowed to fail’.
I have a feeling that it will not be allowed to fail, Chairman Rajnish Kumar said.
Head of India’s biggest lender said he’s certain “some solutions will emerge" to steady Yes Bank, which has been on a prolonged quest to raise new capital.
“Yes Bank is a significant player in the market with an almost $40 billion balance sheet," State Bank of India Chairman Rajnish Kumar told Bloomberg Television in Davos.
The capital-starved bank also reported setbacks in its USD 2-billion fundraising plans
Kumar’s statement follows speculation that the centre, which controls State Bank of India, may ask the lender to play a role in bailing out the private-sector Yes Bank. However, last month Kumar said it was “out of the question that SBI will do anything for Yes Bank."
Notably, amid ongoing crisis, Yes Bank's shares have plunged over 80 per cent over the past year. The bank is trying to shore up a core equity capital ratio that’s barely above a regulatory minimum of 8%.
“Further prolonging the capital raise could create panic among credit investors, potentially causing unwanted liquidity pressure for the bank," Bloomberg Intelligence analyst Diksha Gera wrote in a report.
Kumar also said that if Yes Bank fail, it won’t be good for India’s economy. “Because a bank of that size, if it is allowed to fail, there’s a problem," he said. “And I am sure that some solutions will emerge."
Allaying concerns over reports of its weakening financial health, earlier, Yes Bank had said the lender's capital adequacy is at a comfortable level and efforts are being made to further strengthen it. The bank has asked its customers not to pay heed to rumours about its financial health.
The bank plans to convene an extraordinary general meeting on February 7 to get shareholders'' nod for raising Rs 10,000 crore, and to increase authorised capital from existing Rs 800 crore to Rs 1,100 crore, already cleared by the board.
The troubled bank has been forced to shrink its book due to capital paucity and was hoping to close the fundraising by December.
Also Read: Moody's places Yes Bank's ratings under review; direction uncertain
Also Read: Making efforts to financially strengthen bank further: Yes Bank