Yes Bank: A Financial Thriller of Rise, Ruin, and Resurrection 💵

Rupeeting
May 10
4 min read

“India Bole Yes” - this was the motto for what once was the 4th largest private bank in the country, but their story was filled with a lot of “no’s” - from investors, customers, and regulars alike.

This is the story of Yes Bank - one that is straight out of a thriller novel. So let’s go through it in that manner too!

The Origin Story: From Ambition to Ascent

With this statement as a precursor, the story of Yes Bank in retrospect seems quite a laughable statement, yet the initial plot for the company was so unlike what it turned into.

The Yes Bank saga began in the late 1990s, when three seasoned bankers - Rana Kapoor, Ashok Kapur, and Harkirat Singh - joined forces after successful stints at global banks.

Their first venture, Rabo India Finance, in partnership with Rabobank of the Netherlands, laid the foundation for their next big leap. By 2003, after selling their stakes in Rabo India Finance, Kapoor and Kapur (Singh exited that year over governance differences) secured a coveted banking license from the RBI.

Yes Bank officially opened its doors in August 2004, with its first branch in Mumbai. The bank’s initial shareholding was a blend of Indian promoters (Kapoor and Kapur at 26% each), Rabobank (20%), private equity, and new directors.

Its IPO in 2005 was a resounding success, raising Rs. 300 crore at Rs. 35 per share - oversubscribed 30x, signalling immense investor confidence.

By the late 2000s, Yes Bank was scaling rapidly:

Branches grew from 17 (2005) to over 1,100 by 2019.
Loan book grew 26x, from Rs. 761 crore in 2003 to over Rs. 2 lakh crore by 2019.
Deposits and advances clocked 24% and 36% CAGR (2010–2019).
By 2019, Yes Bank had become India’s fourth-largest private sector bank by assets, with a market cap above Rs. 1,00,000 crore.

Yet, in the midst of all this glory came a grim awakening, with one of the founders being unable to see his creation come to life. Ashok Kapur met with an untimely death in the 2008 Mumbai terror attacks, with Rana Kapoor left as the sole promoter - and that’s where the whole plot twists away.

Act I: Cracks Beneath the Surface

The bank’s strategy was built on aggressive corporate lending, especially to riskier sectors like real estate and capital markets. By 2018, 63% of its loans were to corporates (compared to 17% retail), and 18% of advances were unsecured - the highest among peers.

Governance Falters

2008: Co-founder Ashok Kapur was killed in the Mumbai attacks, sparking succession battles.
2013: Boardroom disputes erupted as Kapur’s widow sued for a seat, exposing governance weaknesses.
2015–2018: RBI audits revealed under-reporting of bad loans. Gross NPAs jumped from 0.27% (2010) to 3.22% (2019), but the true scale was hidden by under-provisioning and creative accounting.

Act II: The Unravelling (2018–2020)

2018: The RBI cut short Rana Kapoor’s tenure amid mounting concerns.
2019: Ravneet Gill took over, but the rot was deep. The bank’s attempts to raise capital failed as more bad loans surfaced.
March 2020: The crisis peaked. The RBI imposed a moratorium, capping withdrawals at Rs. 50,000. Yes Bank’s stock crashed to Rs. 5. Depositors queued in panic, all while the sole remaining founder was arrested for alleged money laundering of Rs. 4,300 crore.

Act III: The Rescue

The Bailout (March 2020)

SBI led a Rs. 7,250 crore rescue, joined by ICICI, HDFC, Axis, Kotak, and others, collectively taking a 49% stake.
Prashant Kumar, an SBI veteran, was appointed CEO. The RBI and government orchestrated a swift reconstruction - within days, the moratorium was lifted, and operations resumed.
Seven investors infused Rs. 12,000 crore, including marquee names like Rakesh Jhunjhunwala, Radhakishan Damani, and Azim Premji Trust.

The Turnaround (2020–2025)

After the 2020 crisis, Prashant Kumar and his team executed a swift and disciplined turnaround by aggressively recognising and providing for bad loans, raising fresh capital from marquee investors, and pivoting away from risky corporate lending to focus on retail and digital banking. They overhauled risk management, tightened underwriting, and slashed costs by any means necessary.

The result?

Gross NPAs fell from 16.8% (2020) to ~2% (2025).
Net Profit rebounded to Rs. 2,406 crore in FY25, up 92% YoY.
Liquidity Coverage Ratio (LCR): From a perilous 37% (2020) to a robust 118% (Dec 2023).
CASA Ratio: Climbed to ~30%, still trailing top peers but steadily improving.
Cost-to-Income Ratio: Sequentially reduced for four quarters, now at 67.3%.

Coupled with the stock price rising to Rs. 18-20 from Rs. 5, clearly they have done something right.

Act IV: The Big News

Sumitomo Mitsui Banking Corporation (SMBC), Japan’s second-largest bank, signed a deal to acquire a 20% stake in Yes Bank for Rs. 13,483 crore (US$ 1.6 billion), paying Rs. 21.5 per share - a premium to the prevailing market price.
Stake Breakdown: SMBC will buy 13.2% from SBI (for Rs. 8,889 crore) and 6.8% from other banks (Axis, HDFC, ICICI, Kotak, Bandhan, Federal, IDFC First).
Aftermath: SBI will retain >10% stake. The deal awaits regulatory approvals but signals a new era for Yes Bank, marking the largest cross-border investment in Indian banking history.

The Road Ahead

Yes Bank’s journey is a saga of ambition, hubris, crisis, and redemption. From the brink of collapse in 2020 to a landmark global investment in 2025, the bank has staged one of Indian finance’s most dramatic turnarounds.

With SMBC’s entry (and trajectory to become the single largest shareholder of the company), a cleaned-up balance sheet, and a renewed growth agenda, Yes Bank is poised for a new chapter-one that could see it reclaim its place among India’s banking elite.