[Warwithwheels]

After reading about all these bank failures, it doesn't encourage the current generation to save money at all. We'd rather be better off living on loans and credit cards. Atleast that doesn't hurt as much as loosing our hard earned money. Way to go!

[FrozeninTime]

Originally Posted by beat runner

there is very little I am gaining from this arrangement. We seriously need better financial products and education.

What we need is a better Government not better financial products. If these thing happens on regular frequency people's risk appetite will decrease and we will back to what we were in late 1990s.

[JithinR]

Originally Posted by beat runner

I am an impacted party here. Yes Bank is our (me+wife joint) primary account for FDs and stuff. Guess should have read the signs early and shifted our funds.
Though, this leaves a question - after paying taxes through nose, whatever we save, if that is not secure in a bank of this size, what are people supposed to do? The government machinery shouldnt be hold responsible for reaching this level and not taking any actions well in advance?

Sorry to hear about your trouble sir. Hopefully, this Bank will be turned around for the better.

That said, I have the same question as the OP. The bank already has multiple CAs under its payroll (they might be corrupt or incompetent), RBI has auditors for the bank (they might also be corrupt or incompetent) and if I am not completely clueless about the finance sector they are additional director appointed by the RBI to the board.

How is that all these guys missed the signs...or is it something that every one knew but just blew up out of their control and came into the media spotlight now.

Finally, I would like to ask if someone more knowledgeable here can help give some pointers on how normal citizens can tell if the Bank is going under. I mean I can see Gross NPA, Net NPA and a lot of other stuff but can't relate them to understand the fiscal condition of any bank.

[dark.knight]

Gives us all a valuable lesson that money is only worth its weight for that day, factors like inflation, deflation, bank status etc keeps the value of money a perpetual mystery always, its been stated in theory since ever, but when its real and starts affecting people it gains a whole new meaning.

Not a good sign, ever since the PNB scandal people have taken measures and this again, should remind everyone that the good times cannot always be, the best way is to diversify investments, and the simplest, most secure way is to hold smaller amounts in various banks to hedge the risk. We are in uncertain times today. Banks have been a tricky balancing act even in the strongest of economies leave alone a nation like India.

[skchettry]

Time to move on to some other bank. The lure of 6% interest on savings acounts while others are at 3.5 or 4% and mariginally higher than the rest on FDs, has taken its toll. All customers of Yes Bank including myself have been informed frequently by the media about the high divergence, high debt to equity ratio, criminally high NPAs and the statements like ' if there's none to give you a loan, then there's Yes Bank'. Reading all these news and despite my RM constantly apprising me of the bank being able to find investors to raise capital, I moved most of my deposits to another bank over the last month. A few FDs are still left there because I know government will not allow it to collapse. Except for the unscrupulous management which sided with defaulters regarding loans, the bank has got a very good retail customer oriented system in place.
However I feel after normalcy is restored, I should move on to some other bank. I am considering Kotak Mahindra or HDFC in the private banking space (I already have an account with Axis Bank) or SBI/BOB in the PSU banking space. Makes sense?

[JithinR]

Originally Posted by skchettry

Time to move on to some other bank. The lure of 6% interest on savings acounts while others are at 3.5 or 4% and mariginally higher than the rest on FDs, has taken its toll. All customers of Yes Bank including myself have been informed frequently by the media about the high divergence, high debt to equity ratio, criminally high NPAs and the statements like ' if there's none to give you a loan, then there's Yes Bank'. Reading all these news and despite my RM constantly apprising me of the bank being able to find investors to raise capital, I moved most of my deposits to another bank over the last month. A few FDs are still left there because I know government will not allow it to collapse. Except for the unscrupulous management which sided with defaulters regarding loans, the bank has got a very good retail customer oriented system in place.
However I feel after normalcy is restored, I should move on to some other bank. I am considering Kotak Mahindra or HDFC in the private banking space (I already have an account with Axis Bank) or SBI/BOB in the PSU banking space. Makes sense?

Well Kotak does give 6% rate interest for deposits over 1lakh. But I am now worried about the health of this one too.

[GTO]

SBI & LIC stepping in is very good news for any of you who have deposits. The RBI cannot afford Yes Bank to collapse - it'll create ripples all over the economy.

Reason for the collapse is simple. Mr Yes Man from Yes Bank gave loans to anyone with a pulse.

If nobody will lend you money, Rana Kapoor certainly will. Many an industrialist has lived for a good part of the last decade or more with this unshakeable belief.

Five years ago, the promoter of a mid-size shipping company was staring down a barrel of debt. A large private sector bank was after him for repayment and time was running out. The money involved was around 3.5 billion and every bank he turned to was reluctant to help. That was understandable since talk of his company’s liquidation was already doing the rounds. A well-wisher told him that Kapoor, who was the big boss at Yes Bank, would be the person to reach out to. The businessman could not reach the banker despite making many calls but, a couple of days later, Kapoor’s office reached out to him. They wanted a meeting over dinner and the venue was to be the banker’s home at Samudra Mahal, Worli.

Full Article

[Dsan]

I too have my FDs(the money you save from yourself for a better future) in yes bank. While all news articles and forums are saying that the money is safe, I still have a question and fear in mind.

Is there someone out there, from PMC bank(2019) or from past experience of global trust bank(2003) or united trust bank(2010), who has actually received the money back?
Do we get all of our money with interest, or there are some cuts?
How long before I can access the funds ?
How do I choose the bank? ( I already have other accounts/FDs in govt and other Pvt sector banks )

[GTO]

Originally Posted by Dsan

I too have my FDs(the money you save from yourself for a better future) in yes bank.

Purely out of curiosity (am not finger-pointing). Yes Bank has suffered bad press for a long time now. Their share price has tanked too. It was known that they were in trouble & had hidden many bad loans from the RBI.

Why didn't you guys move your FDs elsewhere earlier? Thank you.

[fhdowntheline]

Originally Posted by GTO

Purely out of curiosity (am not finger-pointing). Yes Bank has suffered bad press for a long time now. Their share price has tanked too. It was known that they were in trouble & had hidden many bad loans from the RBI.

Why didn't you guys move your FDs elsewhere earlier? Thank you.

Agree- also I am appalled at RBI's lack of attention towards massively inflated advances in one FY where it jumped 55% apparently. Why did it not catch the attention of the central bank? Either they are overworked or incapable of conducting the dual job of being the central treasurer and regulator. Perhaps we should have a Financial Market Regulatory authority that exclusively looks at financial services regulation.

[Dsan]

Originally Posted by GTO

Purely out of curiosity (am not finger-pointing). Yes Bank has suffered bad press for a long time now. Their share price has tanked too. It was known that they were in trouble & had hidden many bad loans from the RBI.

Why didn't you guys move your FDs elsewhere earlier? Thank you.

Greed of earning a marginally higher interest.
(I moved some funds in January as they matured, rest of them will mature in another 6 months time and no interest is payable if withdrawn before maturity)

Having said that.

How do I judge a bank? Which one is next inline to collapse?
Even with their share prices getting tanked, share trading hasn’t stopped, many people still trade in them. Again for the greed of high returns.

There often are media stories about different companies/banks/funds, which are true/motivated. Not all media houses are run like teamBHP.

[GTO]

Originally Posted by Dsan

Greed of earning a marginally higher interest.

Ah okay. Thanks for sharing, bud!

My suggestion = instead of just looking at the "interest rate", we should also consider the "actual gain". As an example, my branch manager was pushing me to go for a riskier scheme at his PSU bank which was offering 0.75% more. I told him "Mr. xxxx, do you want me to take more risk just because I'll get Rs. 750 bucks / lakh more?". I don't think so.

An additional 750 bucks / 1 lakh invested isn't going to change my lifestyle even 0%. I am a fairly conservative investor.

How do I judge a bank? Which one is next inline to collapse?

I trust my money the most with PSU banks, man.

Not all media houses are run like teamBHP.

Thank you. You made my Saturday .

Originally Posted by Warwithwheels

After reading about all these bank failures, it doesn't encourage the current generation to save money at all. We'd rather be better off living on loans and credit cards.

Brother, the pain is on the left hand, but you are talking about applying balm on the right hand . Your lesson from this incident should be to invest more safely & conservatively, in choice of financial institution too.

[whitewing]

Well, another bailout at the cost of the tax payer (and perhaps the correct option). The problem has being festering for more than a year... one only wonders if RBI is more reactionary than proactive in detecting these kind of loop holes.
Granted thieves will always find ways to game the system, but effectiveness of RBI needs to be questioned given the background of multiple mis-governance and frauds occurring in the banking system.

Given a situation where a lay investor is assured of return of deposit; then would they not prefer an aggressive bank (like Yes Bank) over a more conservative bank (say HDFC). So, are is the incentive being given for a risk taker at the cost of tax payer's money?

[MDED]

Okay here are 2 cents of a banker (read PSU) on this entire episode. The central bank said the financial position of Yes Bank has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits, etcetra, etcetra.

We consider Indian financial market, more so banking as one of the traditional and conservative industry with hoards of regulators/regulations to take care of the interest of small investors, customers, etc. But, the appalling situation at Yes Bank is principally owing to the failures of the main regulator of our country, i.e., RBI. For the past 1 year a nominee director was there on the panel of Yes Bank board and yet he chose to remain mum on the sorry state of affairs of Yes Bank.

Back in 2004. when RBI was granting Bank licenses, a seasoned Banker like Mr Rana Kapoor jumped the bandwagon of opening Bank and created a name for itself in the lending circuit as the one financier who is there for every borrower who has been rejected by other lenders! What was the business model/modus operandi adopted by the Bank? The Bank lent to very high rick clientele and in return charged high rate of interests and processing fees. Infact, there has been a report which says that amongst all the Banks (PSU, Private and Old Generation Pvt. Banks) Yes Bank had the highest fee income! And the RBI simply overlooked this aspect of exceptional fee based income generated by Yes Bank. If they would have probed with finesse, then skeletons would have come tumbling in the lending book of Yes Bank.

My friends at Yes Bank used to tell me, that even this Bank has got board of directors, all the shots are called by none other than the founder. Typically akin to a one man show. So, when you fish in murky waters chances are for good catch, but then it comes with the risk of getting bundled in the same murk. According to the RBI guidelines on licensing of private sector banks, promoters and promoter group are mandated to pare their total paid-up voting equity capital to 40% within five years, to 30% within a period of 10 years and to 15% within 15 years from date of commencement of business. In fact this clause has been the pain point between several private bank promoters with RBI and the matters are even dragged to the Courts.

Whether my money is safe?

This question will be lurking in several of our BHPIans minds who are the account holders of Yes Bank. Trust me, since the biggest and oldest name in the Banking sector of India (SBI) has pledged to takeover 49% of the shares of Yes Bank, your deposits are safe! Of course, it doesn't make sense for SBI, which already is reeling with the stress of amalgamation of its associate Banks, to come forward and take another bleeding asset like Yes Bank. The central government who is the owner of SBI nudged Mr Kumar do bite this bullet, as failure of a Bank like Yes, could have serious ramifications for the already battered economy.

So, my advice would be to stick to the following in these turbulent times:
1. Park your surplus funds in PPF, SSA, other post office deposit schemes
2. I think all of us will be having a SB account with SBI. If the account is dormant, then activate it and keep deposits over there.
3. If at point no.2 the service is bad, then think of BOB, PNB, UBI or lest the old generation private sector banks like, Tamilnad Mercantile Bank, City Union Bank, Karur Vysya Bank, Federal Bank, South Indian Bank, etc.
4. Don't put all your eggs in one basket. Keep FDs with leading PSBs, KVP, NSC, PPF, SSSA with India Post and may be invest in NPS.
5. You can think of taking LIC policies (some may say the returns are poor, but at least there are returns).

PS: Industrialists an senior bankers like Uday Kotak have vouched for privatisation of all the PSBs, I think his Bank, KMBL should have come forward and saved yes Bank from falling of the clip and Chetan Bhagat can write an excellent editorial in dailies on how a private Bank have become the white knight for private Banks failing.

Lets have faith in god and move along.

[V.Narayan]

Yes Bank's Rana Kapoor taken in by the Enforcement Directorate for questioning.

https://www.hindustantimes.com/busin...V5LRc19wJ.html