Towards the end of November, capital-starved YES Bank got fresh capital infusion offers from a slew of investors. Following the offers, the bank notified stock exchanges that its board would meet on December 10.

The meeting began at 11.00 a.m. and ended at 4:15 p.m. So, what is the takeaway for investors from the 5-hour-and-15-minute-long board meeting? In a word, ambiguity.

YES Bank, in a notification on the meeting’s outcome, said “the board is willing to favourably consider the offer of $500 million of Citax Holdings and Citax Investment Group; and the final decision regarding allotment to follow in the next board meeting, subject to requisite regulatory approval(s)”.

The bank also said that the binding offer of $1.2 billion submitted by Erwin Singh Braich/SPGP Holdings continues to be under discussion. “The bank shall continue to evaluate other potential investors to raise capital up to $2 billion,” the release added.

YES Bank has been struggling for funds for quite some time yet “they still haven’t firmed up on who could be the potential investors,” Suresh Ganapathy, banking analyst at Macquarie Capital Securities (India), wrote in a note dated December 10. “It has been close to nine months since the new CEO Ravneet Gill took over, and they are yet to raise money.”

Referring to an investor roadshow in Hong Kong and Singapore in September, Ganapathy wrote: “We had clearly said none of the 40 investors whom we met wanted to give YES Bank capital.” He further added that the struggle to raise money from quality investors shows that investor interest in the stock continues to be very low.

His report assigns an ‘underperform’ rating on the YES Bank stock, with a 12-month target price of ₹50 a share. That’s when the stock was trading at ₹56.2—which means the Macquarie analyst saw an 11% decline in the stock.

Ganapathy has raised some relevant questions which seasoned investors would have for a bank which is in such a dire state: Why did the board even decide to announce that they have a binding offer from a Canadian individual Erwin Singh Braich whose background is mysterious and who as per an article said he wanted to invest in YES Bank because he liked the logo of the bank?

That apart, Braich has been involved in several lawsuits. “Should the management have not done any due diligence before announcing his bid? What is his source of his money? What is the probability of the Reserve Bank of India (RBI) approving such an investor with a questionable track record?” Ganapathy noted.

“Why is the board even considering raising money from Erwin Singh Braich and still indecisive?” he asked further. “And what about Citax investments where there isn’t much information available in the public domain?”

There is confusion about the quantum of capital the private lender needs and the level of stress the bank has in its lending books. Macquarie, in its earlier reports, had articulated that the total capital needed would be around $2.5 billion-$3 billion over the next 12-18 months even after factoring in operating profits for the next six quarters. “Note that YES Bank’s net worth is around ₹25,000 crore and below investment grade book (BB-rated and below) is around ₹30,000 crore, and BBB-rated book is around ₹50,000 crore,” Ganapathy wrote.

The most important question for YES Bank as well as all its stakeholders is the way forward. Interestingly, Ganapathy touched upon a sensitive option: Nationalisation?

“In our view, if the bank is unable to raise money in the next six months it poses a grave danger to the financial system,” Ganapathy wrote. “When a bank collapses, the clearing system comes to a halt and hence the contagion impact of a bank collapse is far higher than that of the collapse of an NBFC (non-banking financial company) in our view.”

The question about nationalisation is pertinent. There are several such instances when private sector banks have failed and have been bailed out by state-owned banks.

The Macquarie report quoted two prominent examples. One, the acquisition of Global Trust Bank (GTB) by public sector Oriental Bank of Commerce (OBC). Two, the acquisition of United Western Bank (UWB) by IDBI (then a PSB). “In both cases, the banks were put under a moratorium, and the RBI and government came forward and did a forced merger,” Ganapathy pointed out.

The Macquarie report also pointed out what should one watch out for: Apart from stress in the loan books, one needs to see whether there is a run on bank deposits. “We have already seen the deposit base declining for the past couple of quarters,” wrote Ganapathy. “We are mindful that a former RBI Deputy Governor is on the board and closely watching the developments and how the situation is playing out,” he added.

To highlight the seriousness of the problem, Ganapathy noted: “If the collapse of NBFCs like IL&FS and DHFL could freeze up liquidity, a collapse of a bank could be a far more serious issue, as banking is heavily based on trust; and any freezing of the clearing system due to a collapse of a bank could choke the system and further jeopardise economic growth, which is already in the doldrums.”

These challenges and the lack of clarity on how Ravneet Gill would bring the ship out of choppy waters will define the future course for the capital-starved private lender. Till then, the stock price will continue to react to the uncertainties.

By noon, on Wednesday, the stock touched the month’s low of ₹40.7 a share, down 19.49% from the previous close of ₹50.55 a share. Compared to the month’s high of ₹75.35, the fall to ₹40.7 is a correction of over 45.98%. At the end of the trading day, YES Bank closed 15.33% lower at ₹42.8 a share.

Gill has his task cut out.

Follow us on Facebook, Twitter & YouTube to never miss an update from Fortune India. To buy a copy, visit Amazon.