CARE Ratings Places Yes Bank’s Debt Instruments Under Credit Watch

Debt instruments of Yes Bank Ltd. will be closely eyed by Care Ratings after the term of its Chief Executive Officer and Managing Director Rana Kapoor was cut short by the Reserve Bank of India.

The ratings assigned to various debt instruments of Yes Bank have been put on “credit watch with developing implications” on account of the RBI’s action, CARE Ratings said in a press release today. Kapoor has been instrumental for the bank's growth since its inception and the selection of his successor would be “critical for the future prospects of the bank”, it added.

These are the debt instruments put under credit watch:

The banking regulator in a letter last week had said that Kapoor’s term as MD and CEO of Yes Bank would only extend up to January 31, 2019. The board had earlier approved a three-year term for Kapoor, starting September 2018. That has made investors jittery with the lender's stock falling over 42 percent since. Earlier this week, the board of the private sector lender decided to request the RBI for an extension till at least Apr. 30, 2019. It also said that it will set up search and selection committee to find a new chief.

To be sure, Care Ratings hasn’t taken any rating action on the lender. It has only said that it will continue to monitor the developments around the bank, while acknowledging lender’s adequate capitalisation level, healthy profits and a stable asset ration.

“The ratings of various debt instruments of Yes Bank factors in consistent performance of the bank in terms of profitability, stable asset quality parameters along with an improvement in the funding and liquidity profiles,” it said. “Asset quality, profitability and capital adequacy levels and stability of funding profile are the key rating sensitives.”