YES BANK SCAM

INTRODUCTION

Yes, banking began on June 15, 2005. The total issuance amount was 31,500 Rakı, the issue size was 700 lakh, and 1.75 Crore shares were reserved for individual investors. Listed as BSE and NSE on July 12, the stock price at the time of listing was Rs.45.

Overview: The scam included millions of rupees in application funding. These people opened many DEMAT accounts and applied for shares from many BENAMI accounts. There were 13 people who used the same trick to win a higher share award in the Yesbank public offering. Ms Rupalben Panchal is said to have devised an ingenious way to get more public issue quotas from the retail sector by opening a Benami Demat account.

Rupalben Panchal was one of the biggest players in this scam. They direct their funds to the retail segment and receive more allocations. At Yes Bank IPO Scam, a group of individuals did just that, but if you spend the same money and create more applications through your BENAMI account, your chances of allocation are at least five times higher[1]. If you apply for a high net worth (HNI) with a IPO, the chances of an award are small.

REASONS FOR THE END OF YES BANK

But when banks reached their peak of success, banks began lending billions of dollars to businesses (due to the overwhelming reaction). However, some clients, including Dewan Housing Finance Corp, were already under financial stress. Most of these companies, such as Ltd (DHFL), Infrastructure Leasing and Financial Services (IL & FS), Anil Ambani’s Reliance Group, Zee Group, Subhash Chandra’s Essel Group, have no way to actually repay their debt to the bank and are unwise. bottom. Safe investment. However, UBS has analyzed the bank’s blind approach to such massive growth, but it is only temporary. But even after such warnings Yes Bank failed to control its mess of risky decisions. There has been many questions were raised as to why the financial assistance was given to these companies. After months of investigation, on March 5 2020, the Reserve Bank of India announced the order to it supersedes the Yes Bank Board of Directors for a period of 30 days “owing to serious deterioration in the financial position of the Bank”. Within a month of Ravneet Gill taking on as head of affirmative Bank on March 2019 it absolutely was calculable that their foreign terrorist organization was standing at V-E Day. This gave the image that 8 % of all loans given out by affirmative bank were dangerous loans and thus they additionally downgraded them[2].

Analysis of issues and learning from the case: Soon the bank was at its peak but every investor felt something suspicious with such high numbers and finally in 2017, RBI sensed a problem with this bank and started monitoring over its governance issues and finally pointed out that Bank was hiding its actual NPAs. It was promptly caught by the RBI in 2015, 2016 and also in 2017 which involved the RBI directing Yes bank along with several other banks to report transparently. The bad or unrecoverable loans given out by Yes Bank stood at Rs 50,396 crores as of September 2019. With news of Yes Bank shares tumbling with over 85% downfall and founders accused of money laundering, made Yes Bank hard to be recognized as the same bank that once attracted so many retail and veteran investors. The fact that the lender ended up at the resolution stage, without ever being placed under the central bank`s Prompt Corrective Action (PCA) framework, also raises a question mark over how and why Yes Bank eluded the specifically tailor made solution to address weakness at banks. Following the reasons that led to failure of yes bank:

Bad investments: One of the main reasons that led to such massive fall were the bank`s decisions for entering into some risky investments which were clearly in no condition as a fruitful debt payers. It before long became solely the only real disposition partner to such organizations resulting in huge profits however only quickly. Whereas dangerous loans gathered, the bank didn’t create enough provisions in its profits. Its provisions were rock bottom among comparable banks.

CONCLUSION

After reviewing the legal provisions that the Indian Parliament has given to its legal mechanism, we can conclude that our corporate system lacks legal enforceability and strict checks and balance rules increase. This is the main reason for fraud and loss in major companies. National economy, Corruption of the system is certainly a serious concern, but more stringent and equally enforced protection laws can eliminate illegal and malicious acts in the corporate sector.

The whole situation has caused considerable anxiety among people, and of course it is. Due to the huge loss of public funds, many have lost the collateral deposited in banks and questioned it. The overall situation was also that banks were running low on deposits and couldn’t raise money[3].

 However, RBI said SBI is ready to invest in Yes Bank Ltd. And participate in their reconstruction program. Therefore, the Reserve Bank of India has proposed details of Yes Bank’s new capital raising program through subsection (4) of Section 45 of the Banking Regulation Act of 1949.


[1] https://medium.com/consulting-insights/yes-bank-case-study-analysis-c01a0dcfd825

[2] https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49477

[3] https://www.insightsonindia.com/2020/03/09/insights-into-editorial-banking-on-bailouts-on-yes-bank-crisis/

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

IF YOU ARE INTERESTED IN PARTICIPATING IN THE SAME, DO LET ME KNOW.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at secondinnings.hr@gmail.com

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.