The cash-starved private sector lender YES Bank, which has been struggling to raise fresh funds from the market, has seen a massive erosion in its deposit base, claims a letter by a former independent director of the bank.



According to the letter purportedly sent to Atanu Chakraborty, Secretary, Department of Economic Affairs (A copy is with DH), by Uttam Prakash Agarwal, who resigned as an independent director of the Bank during mid-January, has witnessed a gross withdrawal of Rs 1.02 lakh crore since March 1, 2019.



The letter has also alleged YES Bank CEO Ravneet Gill of breach of governance, non-compliances, undue influence and control on the majority members of the board through quid pro quo and misleading investors.

"... withdrawal of deposits of nearly Rs 1.02 lakh crore, of which nearly Rs 77,000 crore represents the reduction in Fixed Deposits and nearly Rs 25,000 crore represents a reduction in CASA in the last 11 months i.e. between March 1, 2019, till date," the letter dated January 30 said.



Despite repeated attempts over the past four days, the bank's spokesperson did not respond to a questionnaire sent by DH.

Analysts tracking the bank say that the bank must carefully navigate its financials in the next couple of quarters in order to survive. “YES Bank has challenges both on the asset and liabilities side of its balance sheet. How the management navigates its balance sheet over the next couple of months will determine its future,” said Amit Tandon, Founder & MD of proxy advisory firm IiAS.



The erosion of the deposit base is likely to hit the bank's already stressed CASA ratio further, at a time when the bank is planning to raise more funds. Any depreciation in the bank's CASA ratio is likely to increase the cost of funding for the bank. In the September quarter as well, the bank’s deposit base was down by 7.3%, while its CASA dipped by 5.3%.



CASA is the amount of money that gets deposited in the current and savings accounts of the bank -- the cheapest source of funds for banks.

“Investors are anxious to get clarity on the issues surrounding the bank, including the status of the fundraising. It is not clear whether the bank can continue to function in limbo, where lending has been dramatically curtailed and depositors would have moved their funds out of the bank,” said Shriram Subramanian, MD at InGovern, a Bengaluru-based proxy advisory firm.



The bank’s depositors are upset with the bank’s approach towards the crisis. “My relationship manager didn’t even bother to inform me about the crisis, and he still hasn’t. It was only through an acquaintance at the Bank that I came to know of the severity of the crisis the bank has been staring at. This was also after I confronted him,” said a former YES Bank depositor, who shifted his account recently to a rival private lender.



YES Bank shares ended the day's trade with a decline of 1.99% at Rs 36.85 on Bombay Stock Exchange.



Banks misses Q3 results deadline

Meanwhile, YES Bank has missed the Sebi-stipulated deadline for announcing its December quarter financial results as the liquidity crisis at the bank seems to have worsened.

The bank hasn't sent a prior notification to the exchanges for holding its board meeting to announce the results despite the deadline for this expiring on Monday.

Despite repeated attempts over the past four days, the bank didn’t respond to queries sent by DH.

When contacted, BSE officials confirmed that they have not received any communication from YES Bank in this regard.

Sebi regulations under the compliance calendar state that any listed firm must submit their results to the exchanges within 45 days of the end of the quarter. They also need to inform the exchanges five days prior to holding the board meet to take on record financial results for the quarter. In case of YES Bank, 42 days out of these 45 days are over.