Why YES was a NO?

The Bank which said YES to all the borrowers was finally compelled to say NO to all the depositors.
The RBI on 5th March 2020, imposed a moratorium on YES Bank and restricted withdrawals up to ₹50,000 for all its customers. Next day, shares of so-called India’s 4th largest private bank hit an all-time low of ₹5.65 on Indian bourses.
Bad loans, corporate misgovernance and sloppiness on the part of regulators lead to the grim scenario.


In this blog, we will not talk about the reasons and explain the crisis, as that is commonly available in the news forums. Rather, we will go by our name, rare4share, and demystify the Annual Report of Yes Bank. The most evident signs of fraud were quite vivid in the 2018-19 Annual Report (AR) of Yes Bank.

Firstly, AR started with the page of Awards and Recognition, mentioning 14 awards and recognitions received by the Bank. They even covered awards received in 2017 in their 2018-19 annual report. No company, I repeat no company unless in trouble will state their awards on the first page of AR. This is purposely done by corporates to cover their shortcomings. In comparison, HDFC has mentioned it’s Awards and Accolades at the second last page of Annual Report, Axis Bank on 38th page.

Secondly, the Financial Highlights page gave a description of every metrics, except Capital Adequacy Ratio and Gross & Net NPAs (Bad Loans). Gross & Net NPA was cleverly presented in the last section of the page without any description. (Screenshot below)

Financial Highlights 1

Next, in the directors’ report section of AR, the Bank mentioned an increase/decrease in every metrics in percentage terms, except for provisions and contingencies (which includes provision for bad loans). They mentioned it in absolute terms to hide the fact that provisions increased by massive 271.8%. Further, this point was covered at last. (Screenshot Below)
directors report

The man behind the fiasco, Mr Rana Kapoor (ex-MD and CEO, Yes Bank) who was ousted from the Board on 31st January 2019 got his salary increased by 21.2% during the year. It is unusual for the departing CEO to have his salary increased in that year. Mrs Shikha Sharma, Axis Bank’s ex-MD and CEO, who also said goodbye to her role on 31st December 2018, got no increment during the year.


According to corporate governance report included in AR, all the directors inclusive of independent directors had 100% attendance during the Board meetings. Hence, on paper corporate governance of the Bank seems excellent, but in reality, it is quite different. It is highly unusual for independent directors to be present in all the meetings as they have their own work. It is really baffling, that none of the directors was absent in any of the meetings. Even corporates with the highest standard of corporate governance, don’t have complete attendance of independent directors in all their meetings. Auditors and Regulators, you believed this?

Finally, the use of corporate jargons and words in AR. We always believe the more these words are used in the AR, the more the trouble with the corporate. In the below table we have highlighted the use of some words/jargons in the AR of Yes Bank and compared it with HDFC and Axis Bank. The cells highlighted in red shows maximum usage of words, followed by yellow and green. It is clearly visible, that Yes Bank vehemently used business words to hide its inefficiencies.

teble 2

We can clearly see how troubled corporate tries to put a rosy picture of their company in the AR. Hence, we should always read and comprehend annual report very closely and must not get carried away by what is there in it. There were many other things wrong with the AR. However, keeping our content short, we restricted ourselves to the most important ones.
Do share if you believe this was rare! Take Care 🙂

Source: Annual Reports of Yes Bank, HDFC Bank & Axis Bank

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