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Old 9th March 2020, 07:49   #46
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

I do understand why the government has been forced to ask SBI and LIC to take over the bank. Many common people have their life savings in the bank and if it goes under, it will lead to further contagion in economy. However, I personally believe that the free market should rule and the bank should be permitted to go under. No good in the long term comes from propping up a bad business or business model. Just like Jet Airways has been permitted to fail, so should Yes Bank
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Old 9th March 2020, 09:14   #47
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by pganapathy View Post
However, I personally believe that the free market should rule and the bank should be permitted to go under.
I am also a firm believer of the "free market" principle. But we have to make exceptions in exceptional cases. The direct & collateral damage from the shutdown of Yes Bank would have been colossal. It will give a body blow to the economy as well as to customer confidence.

Since this is a car forum, I'm giving you an automotive example. Read up on how the USA govt stepped in to save GM & Chrysler in 2008-09. Reason = what I wrote in my previous paragraph. The loss of jobs, loss to existing owners of GM / Chrysler cars, dealership shutdowns, suppliers going out of business etc. would be like a heart attack to the country.

In these cases, the cost of "saving" a damaged company is far lesser than the direct + indirect cost of letting it die.
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Old 9th March 2020, 09:37   #48
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

I had my NRE account in Yes bank (opened 'cos it gave a better FD return compared to others) and until 2018 had all major FDs in it. By end of 2018, I moved all of it to HDFC and SBI. I thank my stars for it now! Another friend who did not called me yesterday, virtually in tears. Told him to be patient and have trust in RBI. Since he doesn't need the money immediately he can relax a bit.
I now have accounts in SBI, HDFC, ICICI, Citi, IDBI, & Yes banks across the missus and me. Withdrew all our money from Yes and IDBI last year. FDs are mostly across SBI (30%), HDFC (50%) and ICICI (20%). Citi is only for salary and UPI.
Planning to move more money to SBI now and advocate the same to parents and friends too.


The downside of all this: SBI ppl become more insufferable to deal with
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Old 9th March 2020, 10:18   #49
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

Hey guys, on an analysis by Mr Shekhar Gupta (link below), he mentions that PSUs have a much smaller market capitalization than private sector banks. Now, I belong to the STEM field and I'm completely ignorant about financial terms. So, do a higher market capitalization for private banks mean that private banks like HDFC and ICICI are safer than PSUs like SBI and Bank of Baroda?

I'm 24 now and I've just started working (and saving). So, I'd like to have all the advise I can get on investing

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Old 9th March 2020, 10:20   #50
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by msd7 View Post
Noob query...

My family have all their savings account in CITI and ICICI.
We do not have any account in any PSU Bank. Should we open an account in any PSU.
The savings and investments and are through Citi and ICICI is used for daily purchases.

Do we need to open an account in some another bank or is the current situation fine.
I think one account in a PSU is a must, preferably SBI and that option is not there, then you should have either at BoB, PNB or any bank which is backed by some big names like IDBI Bank or HDFC. You can use this account for parking your reserve funds in liquid instruments like FD, RD, Etc.
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Old 9th March 2020, 10:23   #51
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by nagr22 View Post
Has anyone tried using their Yes bank credit card? I tried using it at Big Bazaar a while ago and it was declined every time! Is it something to do with the moratorium?
I tried using ticket card issued by Yes which is prepaid in nature. Did not work.
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Old 9th March 2020, 10:37   #52
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by dragracer567 View Post
Hey guys, on an analysis by Mr Shekhar Gupta (link below), he mentions that PSUs have a much smaller market capitalization than private sector banks. Now, I belong to the STEM field and I'm completely ignorant about financial terms. So, do a higher market capitalization for private banks mean that private banks like HDFC and ICICI are safer than PSUs like SBI and Bank of Baroda?

I'm 24 now and I've just started working (and saving). So, I'd like to have all the advise I can get on investing
Opinion ahead, please do not treat as investment advice.

So, I had seen this video on the day it came out -- the day that the Yes Bank virtually tanked, SBI/LIC's move to acquire the shares came out, and the move to arrest Rana Kapoor started. So, in this video, SG starts with it, and goes on to explain how PSU banks are bad, quoting Market caps of private banking giants. As per him, the current banking crisis is about government being in banking.
To actually go about dissing PSU banks on the day a private ex-success crashes and is awaiting PSU bail out --- in my opinion is a pointer to never listen to this kind of analysis.
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Old 9th March 2020, 10:41   #53
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

I have read in this thread that NOT to buy any shares/stocks of Yes bank even though it is currently going at 15 - (today 18). Was thinking to buy now.

Is it not a good idea to buy now since SBI has decided to come in?
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Old 9th March 2020, 10:58   #54
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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I am also a firm believer of the "free market" principle.
In these cases, the cost of "saving" a damaged company is far lesser than the direct + indirect cost of letting it die.
I would disagree on this, while yes, letting a 'too big to fail' bank like HDFC or ICICI go under would have been disastrous, YES was of orders of magnitude smaller.

Protect the deposits of individuals but let it fail.

A price has to be paid for crony capitalism which was the bane, still is deeply affecting us years after the MMS regime was booted out.

That said, with the SBI saving this rotten edifice, I think the likes of Rana Kapoor, a few board members, some corrupt industrialists need to see life in jail (after full and proper investigations only though)...a strong message has to be sent that enough is enough.
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Old 9th March 2020, 11:04   #55
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by SmartCat View Post
Forget 1 lakh or 5 lakh deposit insurance. RBI will not let commercial banks like Yes Bank go down with depositors' money. Because the consequences will be disastrous. So what will happen is that Yes Bank's assets and liabilities will be acquired by another bank.

But speculators should NOT buy Yes Bank stock at Rs. 15 or Rs. 10 or whatever. Very likely this sucker is going to zero. Shareholders will be paid only if anything is left over after paying back the depositors (customers) and bond holders.
Very well said, government and RBI will not allow such failures where depositors lose money. This is also my concern, this in a way is telling long term investors to treat entire banking sector as one monolith. In practice there is no difference between a YES bank share vs SBI. If SBI takes over YES, the YES becomes SBI.
For stock traders and speculators, it is completely different ball game as their view is quite short term.
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Old 9th March 2020, 11:10   #56
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

Hello Mods, please could you merge this comment with the one above? I could not edit it as I think some timelimit is there. I did try editing.

Edit - to all those asking about ICICI, Kotak, HDFC vs PSU banks,

The above banks are rock solid. Their NPA's (Non performing assets) are in the 1.5% to 3% region, SBI's by comparision is at 7.5%! Other PSU banks are even higher.

In a nutshell, the NPA factor is the amount of bad loans in your books, so imagine you had 100 apples, SBI has 7.5 rotten apples while an HDFC has only 1 rotten apple. The rotten apples as you know spoil the rest in the barrel, so the risk of SBI going under (very simplistically) is much more. Don't forget, just last year SBI underdeclared bad loans to the tune of 4,500 crores iirc and while it declared some $ 180 mn profit, in reality it took a $ 1bn loss!

I personally don't trust NPA's at all as based on the govt in charge, they lend to any person who is connected like happened during the UPA regime. 'evergreening' of loans was a big issue, where when some big shot industrialist would have loans coming due, but lacked the money to pay it off, he / she would simply contact some minister who would issue orders to some PSU bank to issue fresh loans. This is how groups like Kingfisher which had zero profit (in the airline biz) kept adding to their loan book.

Go with the big 3 (ICICI, HDFC and Kotak) in Indian pvt sector banks, and short of the Indian economy totally collapsing, your money is safe.

Of this, I feel Kotak has the best customer service, HDFC is terrible and ICICI middling, so I personally prefer Kotak.

Disclaimer - I don't work in banking and have no relation with any of these banks.
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Old 9th March 2020, 11:15   #57
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by nagr22 View Post
I am in the same boat as you. Made a significant investment after being lured their higher FD rates and now I am stuck. I am hoping that the regulators increase the deposit insurance to 10lakhs from the measly 1 lakh which it is now.
Its 5 lakhs now, they have increased it in the new budget.
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Old 9th March 2020, 11:39   #58
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by Stribog View Post
Edit - to all those asking about ICICI, Kotak, HDFC vs PSU banks,

The above banks are rock solid. Their NPA's (Non performing assets) are in the 1.5% to 3% region, SBI's by comparision is at 7.5%! Other PSU banks are even higher.
SBI had its exposure to bad debt & NPA as well. LIC had made some smart investments in the past and has an impeccable trust among the Indian public. Hope LIC gains are not misused and instead, they must be passed on to the customers (like reduction in premium).
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Originally Posted by GTO View Post
I am also a firm believer of the "free market" principle. But we have to make exceptions in exceptional cases. The direct & collateral damage from the shutdown of Yes Bank would have been colossal. It will give a body blow to the economy as well as to customer confidence.
I am all fine with Govt. pitching in extreme cases. But coercing institutions like SBI & LIC to bail out ailing companies with bad management history is something I am concerned as a customer of SBI & LIC.
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Old 9th March 2020, 12:05   #59
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by GTO View Post

If you want absolute 100% safety, it has to be PSU only. I park all my big funds only at PSU banks, and even there, I spread them out across different ones.
I do the same thing, in addition physical gold (coins, bullion) in a PSU bank locker.

Always go for loans with the weaker bank which is ready to lend easily and collapse or deviate (My loans are with IDBI), deposit funds in a stronger/robust bank which will easily repay, insure only with LIC, regular banking with Citi due to ultimate convenience and finally broking with ZeroDHA, because its Zero . My backup PSU banks are ICICI, South Indian Bank & Karnataka Bank.
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Old 9th March 2020, 12:46   #60
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Default Re: SBI & LIC step in to save Yes Bank; withdrawal cap of Rs 50,000 imposed

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Originally Posted by Thilak29 View Post
I tried using ticket card issued by Yes which is prepaid in nature. Did not work.
I got an SMS that my Yes Bank meal card cannot be used at merchants due to RBI restrictions.
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