ADVERTISEMENT
Shares of embattled private sector lender YES Bank sharply declined 10% to close at ₹56 per share on the S&P BSE Sensex after global ratings agency Moody's downgraded the Ravneet Gill-led bank's credit ratings. Moody's was also negative on its outlook for the company mainly due to the bank's high level of stressed assets and weak capital base to cushion the impact of further deterioration in asset quality.
"The downgrade of YES Bank's deposit and senior unsecured program ratings to B2 from Ba3 and (P)B2 from (P)Ba3 takes into account Moody's expectation that the bank's pool of potential stressed assets and low loss absorbing buffers against those assets — will add pressure to its funding and liquidity, creating additional risks to its standalone credit profile or BCA," Moody's said in a statement.
September 2025
2025 is shaping up to be the year of electric car sales. In a first, India’s electric vehicles (EV) industry crossed the sales milestone of 100,000 units in FY25, fuelled by a slew of launches by major players, including Tata Motors, M&M, Ashok Leyland, JSW MG Motor, Hyundai, BMW, and Mercedes-Benz. The issue also looks at the challenges ahead for Tata Sons chairman N. Chandrasekaran in his third term, and India’s possible responses to U.S. president Donald Trump’s 50% tariff on Indian goods. Read these compelling stories in the latest issue of Fortune India.
Moody's said it expects YES Bank's common equity tier 1 (CET1) ratio of 8.7% at the end of September 2019 to come under significant pressure, unless the bank can raise new capital in the next few quarters. "The rating actions reflect Moody's view that YES Bank's funding and liquidity compares weakly to other rated private sector peers in India, and could come under pressure, if the bank cannot strengthen its solvency in the next few quarters," it added.
The bank has informed investors of bids received from a clutch of investors to the tune of $2 billion. "Moody's notes that YES Bank has received offers from a number of financial investors to invest up to $2.0 billion through new equity capital into the bank. Nevertheless, Moody's notes that there are significant execution risks around the timing, price and regulatory approvals required," the ratings agency cautioned.
Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.