Good read
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Divergence in Asset Classification and Provisioning for position as on March 31, 2018
Mumbai, February 13, 2019:
The Reserve Bank of India (RBI) assesses compliance by Banks with
extant prudential norms on income recognition, asset classification and provisioning (IRACP) as part
of its supervisory processes. As part of this process, YES Bank has received the Risk Assessment
Report for FY2018.
The report observes NIL divergences in the Bankās asset classification and provisioning from the RBI
norms.
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Isnt it too old report (Mar 2018) to publish nowā¦ or RBI took a year to analyze 
but in anycase stock will react positively, good for stockā¦
This is very positive development. At least for sometime all those ācockroach in the kitchenā theories will be put to rest! @jamit05 @ChaitanyaC @sumi00 @hnk_so thought?
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Looks like Yes Bank has found its Yes man. The market will most likely look for salt.
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Needless to say, this was the biggest overhang. Q3 fy19 Book value is arnd 123/- . The valuations were depressed relative to peers mainly due to divergence fears.
Hopefully now they can raise capital at decent valuations given they have debt to equity ratio on the higher side.
Disclosure: invested.
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I keep it off my watchlist as long as people who are responsible for the pain are still around. I might be wrong but for any meaningful and sustainable recovery, RK and his cronies need to be shown the door. I am not playing the bounce trade either.
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Now request fellow boarders to not start doubting the RBI report itself and pull a Kejriwal! 
Is there a way to read the RBI report?
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I wonder what made you ask me the question along with the people you have asked. I am a newbie investor, yet to contribute meaningfully to this forum.
Regarding your query, this is beyond my knowledge to make any kind of comment. This could be construed as a positive sign, one that could bring back some of the lost trust or the story may unfold more and will not be wrapped up soon, there could be more cockroaches. Too soon to react either way. For now, I am on the fence. As I am already invested, I will remain invested as it is not a small-cap (my losses until now are in small-caps). If it turns out to be an improving scenario, I would buy more or this may very well become my first substantial loss in a large-cap.
You forgot to ask @Yogesh_s
YB is a very well entranched name. Good customer serviceā¦ technologically advancedā¦(even PhonePe gives @ybl upi ids only for any of the 50 banks one attaches) Casa growth to be more than the avg. for private banking sector.
It is possibly one of the favourites amongst people in NCR. YB ATMs at metro stationsā¦such as Kashmiri gate, where 3 different routes meetā¦ great visibility.
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As much as this news is positive for Yes Bank investors, IMO this reflects badly on RBIās style of functioning. By its own assessment, Yes bank has NIL divergences and still its CEO is fired. Its true that Yes Bank had large divergences in FY 17 but that was the first year RBI published the report and even other banks had large divergences.
Its a surprise to me why it takes 10 months to publish this report after end of the financial year. RBI publishes other reports on the banking industry which are essentially aggregate data of all banks. I donāt understand how RBI can prepare aggregate data before releasing report on individual banks.
Its unlikely that Yes Bank got its act together after its CEO is fired as he was fired in Sept 2018 and this report is for FY 18 that ended in March 2018. Yes bank apparently corrected its NPA recognition norms in FY 18 itself going by this assessment. RBI should have waited for the report to come out before making a decision on CEO term.
Does this report mean all that the bank is saying about divergences and quality of its book can be taken at face value? That is for the market to decide.
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As you very well know, things are definitely not this simple. Divergence news, demand of CEO to leave, stock plummets, CEO is gone, clean-chit is given, stock sees its past glory. I donāt think so. Falls are free, risings are a few quarters.
Do post more as and when something emerges, many concerned souls in here.
Edited as community felt it wrong.
Guys, pardon my knowledge on Banks.
No Divergence for FY18. However, that still does not confirms there was no divergence in FY 16&17. Or does it clears the name completely if the divergence is not found in the subsequent year and that RBI audit was to blame.
Having worked in a bank in the past, I could comprehend the recent events at Yes Bank and will try to explain (I may be wrong, but just my 2 cents. Kindly do your own due dil):
a) RBI carries regulatory audit of all banks books typically during June to September/October period. So for March 2018, they would have started regulatory audit in June-August 2018. And they publish the report later during the year. This audit scrutinizes individual borrowers files in the bank and independently assess borrowings. So, during my tenure in a bank, a borrower rolled over a loan for 3 times in a row. RBI auditor classified it as ever greening and we had to force the borrower to repay the loan immediately.
b) to my knowledge, in Yes bank there could be many infra loans to highly leveraged companies which were being rolled over yoy. Of course, these would be high yield assets but the borrower would not be able to repay some of these loans immediately (because assets are non operational or the companies are yet to break even etc). Banks typically collect huge restructuring fees on such loans and roll over them. Such practices would have irked auditors and led to massive reclassification drive.
c) Yes Bank would have corrected its actions over last few years since the time RBI pointed out the divergence. Banks would typically refinance or ask the borrower to repay or classify loans as stress assets ( if the loan has to be rolled over more than 2 times with out any repayment). To my knowledge, as per the regulatory norms if a borrower repays a loan and draws back the loan after a cooling period of 1-2 days, loan will not be classified as a stress asset. So, there could still be some ticking time bombs in the books, which may explode in future.
I would classify a bank as an exceptional bank, where Credit department has an independent view on every borrower (thats where Early Warning Indicators are of great use to cull out potential NPAs and quickly get out of the loans before they become rotten apples). If a CEO/Relationship team dictates terms to Credit team of a bank, dooms day is not too far for such a bank. I highly appreciate RBIās act in this whole saga.
Disc: no holdings in Yes Bank. This is not a buy/sell reco. Kindly do your own due diligence, as I could be wrong in my analysis.
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There was a divergence in 2016 and 2017. But they took curative action and no divergence in 2018. Market overreacted on divergence issues of 2016 & 2017.
7d2fec33-464e-4f24-b642-604cd1a4bfd2(1).pdf (71.2 KB)
This would have been funny if I was not invested in Yes Bank.
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Difficult to decide if this is a shakespearan tragedy or a shakespearan comedy
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This Yes Bank saga is comedy gold! Absolutely loving it.
I dont understand how investors do not take governance seriously especially in the case of a lending franchise.
I do not think a contra bet is feasible in this investment idea. I can understand if this was 2017, but there are far better ideas than this in todayās market.
I felt like for the most part that there were issues and a poorly managed lending franchise is worth 0. But then again you have ICICI Bank who seem to be sorting themselves out rather well. And I felt like I was wrong post the clarification.
But after the recent announcement, it really goes to show the intent of the mgmt. They will break rules to gain market cap, they will misreport numbers if it means market cap and that is not something any of us should be a part of in my view. (On the contrary ICICI Bank showed that they really did not care about driving up market cap)
My sincerest feelings to the new investors and old investors of Yes Bank. All the best and in all honesty I hope that this saga has a happy ending for investors.
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Forget Yes bank for a moment ā¦I am now confused what RBI is upto ā¦they donāt want to disclose anything and still they claim that they work in the interest of people / investors??
Can any one help me understand that part please.
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