The NPA Spiral, 2018 to 2020
Yes Bank grew from a 2004 startup into the fourth-largest private bank by advances, reporting return on assets that established peers envied. The engine was aggressive corporate lending into infrastructure, real estate and structured promoter groups, including names such as DHFL and the Essel combine. When the 2018 collapse of infrastructure lender ILandFS froze trust in the system, borrowers who could no longer roll over became the bad loans the bank had deferred recognizing.
Gross non-performing assets jumped from under 2 percent in March 2018 toward 18 percent by the December 2019 quarter, and RBI divergence notices showed the bank had under-reported bad loans for consecutive years. The share price, near 400 rupees in August 2018, surrendered ninety percent over the following eighteen months. The regulator declined to extend founder Rana Kapoor's term in late 2018, and he was arrested by enforcement agencies in March 2020.
Deposit trends told the story before the accounting did. The bank leaned increasingly on expensive bulk and certificate deposits to fund lending that ordinary savers were reluctant to finance, a classic late-cycle signature visible in disclosure footnotes two years before the moratorium.
Moratorium Week, March 2020
On March 5, 2020, after overnight attempts to arrange a private rescue failed, the RBI placed Yes Bank under a moratorium and capped withdrawals at 50,000 rupees per depositor, relaxed shortly after to one lakh for genuine emergencies. Salaries, vendor payments and cheque clearing froze for over a week until a reconstruction scheme took effect on March 13. Trading resumed in violent circuit moves, and the stock settled into the teens once the dust cleared.
The SBI-Led Reconstruction
The rescue carved stressed assets into a bad bank trust and injected roughly 10,000 crore rupees of fresh equity, with State Bank of India permitted to hold up to 49 percent alongside a consortium that included HDFC Bank, ICICI Bank, Axis Bank and Kotak. Crucially, 10,466 crore of additional tier-one bonds were written down to zero, a first for India that ignited litigation and a lasting debate about hybrid instrument risk. Prashant Kumar, a State Bank veteran, took the chief executive chair and ran the cleanup.
The 75,000 Crore Deposit Question
Deposits stood above two lakh crore rupees at the moratorium, while statutory insurance had only just been doubled to five lakh per depositor in the February 2020 budget. Roughly 75,000 crore of deposits sat above that ceiling, and for ten days the country debated whether a private bank could be allowed to burn its uninsured depositors. The reconstruction protected everyone, but the scare forced boards and corporate treasurers to price governance risk into private bank funding costs, a discipline that persists.
Life After the Rescue
The rebuilt bank raised 8,900 crore from Carlyle and Advent in 2022, and in 2025 Japan's SMBC agreed to take roughly twenty percent for about 13,500 crore, the largest foreign investment in an Indian private bank. Deposits rebuilt past the pre-crisis level within two years. Equity holders got no such mercy: the share never returned anywhere near its highs, and buyers who averaged down through 2019 lost capital permanently.
Lessons for Stock Pickers on BuakaewX
On BuakaewX, bank screens flag loan growth running far above system for successive years while funded by costly deposits, and those two lines together described this story well in advance. BuakaewX clients trading banks should read divergence disclosures before price-to-book, because under-reporting is the original sin that breaks every other ratio. The hard rule from March 2020 endures: in a solvency crisis, deposits get protected, hybrid bondholders get written down, and shareholders pay for everything. Lend banks your money, never your blind faith.