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The Revival of Yes Bank

  •  3 min read
  •  1,001
  • 10 Jul 2025
The Revival of Yes Bank

Yes Bank’s story is one of growth, challenge, and renewal.

Once one of India’s fastest-growing private sector banks, it has spent the past few years quietly reshaping its identity, emerging stronger and more focused than ever before.

Founded in 2004 by Rana Kapoor and Ashok Kapur, Yes Bank quickly positioned itself as a bold, ambitious player in India’s banking sector.

It grew rapidly, expanding its loan book and chasing high-growth opportunities, particularly in the corporate space.

For around a decade, the bank was celebrated for its speed and scale.

But behind the scenes, the fast pace came with its own share of risks.

Lending decisions became increasingly aggressive, and over time, concerns began to surface about asset quality and exposure to high-risk borrowers.

By 2015, analysts had begun to voice their doubts. UBS, a global financial services firm, warned that the bank was vulnerable to large corporate defaults.

The red flags grew louder as the bank struggled to manage growing stress in its loan book.

While Yes Bank reported gross non-performing assets (NPAs) of ₹3,277 crore, estimates later suggested the actual figure may have been as high as ₹17,000-₹50,000 crore.

To make matters worse, Kapoor was accused of personally profiting from this allegedly receiving kickbacks worth ₹600 crore in exchange for sanctioning loans to troubled firms.

Investor confidence began to slip, and efforts to raise capital proved difficult.

It became increasingly clear that the bank needed a course correction.

In March 2020, the Reserve Bank of India stepped in with a reconstruction plan to stabilise the bank and restore depositor trust.

A temporary withdrawal cap of ₹50,000 per account was introduced to prevent a potential bank run. In a controversial move, the bank’s Additional Tier 1 (AT1) bondholders saw their entire investment written off, sparking legal challenges.

Rana Kapoor exited, and the State Bank of India became a major shareholder in the bank.

What followed was a systematic effort to turn things around.

Between 2020 and 2023, Yes Bank sold ₹48,000 crore of stressed assets to JC Flowers Asset Reconstruction Company and recovered over ₹13,000 crore in bad loans.

It shifted its lending strategy, focusing more on retail and MSME segments, which now account for 60% of its total loan book, compared to 36% in 2020.

Global private equity players Carlyle and Advent infused fresh capital, helping the bank strengthen its capital adequacy and clean up its balance sheet.

Then, in 2024, a major development brought a fresh wave of optimism.

Japan’s Sumitomo Mitsui Banking Corporation (SMBC) announced plans to acquire a 20% stake in Yes Bank for ₹13,483 crore ($1.6 billion).

This not only gave early rescue investors like SBI, ICICI, and HDFC a profitable exit but also signalled growing global confidence in Yes Bank’s future.

With the RBI approving such a large foreign investment, it became clear that the worst was behind.

Today, under CEO Prashant Kumar, Yes Bank is firmly focused on governance, profitability, and responsible growth.

Its gross NPA is now under 2%, a sharp fall from its crisis peak.

In Q4 FY25, the bank posted a net profit of ₹738 crore - a 63.7% year-on-year rise, driven by improved asset quality, higher interest income, and lower provisions. Total income for the quarter stood at ₹9,355 crore.

Challenges still remain, including fierce competition from NBFCs and new-age players like Jio Financial.

However, with a cleaner balance sheet, global backing, and a renewed strategic focus, Yes Bank has put its crisis years behind it and is ready for a more resilient chapter ahead.

Sources:

IFSA Network
LinkedIn
Business Standard
Economic Times
CNBC TV18
The Daily Brief
Businessline
Livemint
Moneycontrol

This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit.

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