All may not be lost for YES Bank but insiders say its recovery to be slow

It will rely upon the obtaining bank or money related foundation's ability to hold the benefits till the market improves and sell them later to recuperate sizeable lump of the credits.

YES Bank Crisis : All may not be lost for emergency hit YES Bank with banking industry insiders calling attention to that the bank has rock solid insurance against advances.

It will, thusly, rely upon the procuring bank or monetary establishment's ability to hold the benefits till the market improves and sell them later to recuperate sizeable lump of the credits.

For example, if security is a private structure, it may not bring great cost in a discouraged market.

Yet, given that a portion of the enormous budgetary foundations, for example, IL&FS and DHFL have fell as of late, the market may not react well to YES Bank.


"This is the explanation we expect recovery of YES Bank to be extremely moderate," a Mumbai-based bank official said.
Indeed Bank had before put forth all potential attempts to raise development capital however hopelessly fizzled. Since the main private bank is very nearly breakdown, the administration has bumped the SBI to frame a consortium and salvage the bank.


The RBI, as controller, has come vigorously and finding a way to guarantee the bank makes a turnaround.
The circumstance at the YES Bank has arrived at disturbing level constraining the RBI to supplant its board. A breaking point has additionally been forced on withdrawal of stores in overabundance of Rs 50,000.


There is a developing recognition in the market that a sizeable piece of YES Bank's credits have transformed into non-performing resources (NPAs) which are not recoverable. This will prompt disintegration of its advantages yet given that the bank, before, took substantial guarantee for loaning, the market anticipates that the gaining element should recoup some portion of the credits by selling the benefits.

"Advances are unquestionably transforming into NPAs however does the basic security have showcase esteem and to what degree, would they be able to be recouped? What one sees is that bank has just made arrangements for awful credits however the bank has the option to sell the advantages sold with it," another financial industry official said.
The administration is found out to have requested that the SBI lead a consortium to purchase stake in YES Bank. This signals the legislature won't permit the bank to come up short.

YES Bank in talks with mutual funds for raising up to $500 million

If the private bank is able to raise funds in this round, it would get some breathing space.

YES Bank has approached domestic asset management companies (mutual funds) for raising fresh equity capital worth $300-$500 million. This comes amid a slew of rating downgrades and stress on its loan book.

If the private bank is able to raise funds in this round, it would get some breathing space. The lender, however, will still have to work to raise more funds to address concerns. The bank has been aiming to raise a total of $2 billion.

The private lender has been struggling to raise capital for months. It also had to postpone its December 2019 quarter results as the fundraising process consumed most of its top management’s time.

Investment bankers associated with the fundraising exercise said the bank has approached domestic mutual funds for issuing equity shares.

“While there is definite interest in the offering, firm commitments have not been made yet. The bank is in dialogue with mutual funds which had participated in the last equity raising round in 2019,” said one of the bankers.

In August 2019, YES Bank had raised Rs 1,930 crore through the qualified institution placement (QIP) route.

Fund managers have conveyed reservations over putting money into instruments which have a lock-in period. However, discussions are on to find a solution. An email sent to the bank to know the status of its fundraising plans did not get response till the time of going to press.

There is also a plan to issue equity shares on a rights basis. For participating in a rights issue, an investor must be a shareholder, which is why some existing shareholders (mutual funds) are being approached, the banker said. The final investor approvals are expected over the next three days. These investors may exit once a deal to sell a controlling stake in the bank is struck.

On February 12, YES Bank had delayed announcement of its December quarter results as it was in talks with potential investors, including J C Flowers, for raising equity capital. It received non-binding expressions of interest from several investors, including J C Flowers and Tilden Park Capital Management.

Last month, ICRA downgraded the bank’s tier-I and tier-II bonds from “A-” to “BBB+” due to continued delay in capital raising by the lender.

LIC listing may take about a year, says Finance Secretary Rajiv Kumar

Kumar said the idea behind the listing of LIC was to "bring in more transparency and allow the company to share gains with its stakeholders".

The listing of Life Insurance Corporation (LIC) will likely take about one year and the government is not willing to sell more than 10 per cent stake in the insurance behemoth.

“We are already in touch with the Department of Investment and Public Asset 

Management (Dipam) to understand all the processes involved. The LIC Act will have to be amended. It’s not possible to do it in six months and may take around one year,” Finance Secretary Rajiv Kumar said in a media interaction on Sunday.

Kumar said the idea behind the listing of LIC was to “bring in more transparency and allow the company to share gains with its stakeholders”. “It is very important as it will bring in the disclosure norms,” he said.

The sovereign guarantee for all policies issued by LIC will continue, the secretary added.

A top government official said the enterprise value of LIC was roughly Rs 36 trillion “according to the latest figures in the balance sheet”. The official said the government might not dilute “more than 10 per cent” in LIC. “It will certainly be less than 10 per cent,” the official added.

The government might seek exemption from the Securities and Exchange Board of India (Sebi) to offload less than 10 per cent in the initial public offer (IPO).

All companies are required to offer at least 10 per cent in the IPO.

Finance Minister Nirmala Sitharaman had announced a stake sale in LIC through an initial public offer in the Union Budget of 2020-21.

The government aims to mop up Rs 90,000 crore from the listing of LIC and stake sale in IDBI Bank. The government currently owns 100 per cent in LIC.

On the stake sale of IDBI Bank, which is substantially owned and controlled by LIC, Kumar said the government was exploring various options, including a strategic stake sale. The government currently holds around 46 per cent in IDBI Bank.