Yes Bank – The ratings bear the expectations of continued extraordinary systemic support from key shareholders and sizeable ownership by State Bank of India. with respect to Yes Bank, CRISIL has duly taken note of Reconstruction Scheme, 2020 which was announced by Government of India on March 13, 2020.
Under the reconstruction scheme, bank has few other measures to inject equity of Rs 10,000 crore by 8 different entities. But because of the money laundering scam by the bank, it’s ability and bank’s asset quality has weakened. The factors affecting the shift in business model has set focus on granular retail segments which are seen over a longer time period.
The reconstruction scheme followed implementing of a moratorium on Yes Bank by the government on Yes Bank on March 5, 2020. RBI to boost up bank’s liquidity lifted the moratorium on 13 March, 2020 since then bank has been providing full-fledged banking services to its customers.
The lockdown and the restrictions are now being lifted in phases, any further delay in returning to normal operations will increase burden on collections and the asset quality will be impacted.
The ratings firm CRISIL has confirmed the validity as BBB rating on YesBank over Rs 18,000 crore bonds under constant support by the country’s largest lender SBI. It has assigned ‘CRISIL BBB/Stable’ rating to Tier II Bonds of Rs 13,941 crore and infrastructure bonds worth Rs 3780 crore of Yes Bank.
The agency confirmed its ‘CRISIL A2’ rating on certificates of deposit with Yes Bank. BBB ratings are moderately safe with regard to the financial obligations. Debt securities with A2 ratings comprise of strong degree of safety regarding on time payment of financial obligations. Instruments of these kinds carry comparatively low risk.
The nation-wide lockdown has impacted disbursements and collection of various financial institutions. These will be further key-rating monitorable. Further, there can be a rise in the gross non-performing assets as the situation in most of the sectors is weakening. The behaviour of borrowers is likely to differ after the moratorium as the discipline can affect the misconduct levels and affect the collections in near future.