Between ‘yes’ and ‘no’, there is an untold story. There’s much more to the Yes Bank revival than meets the eye
Incredible but true! For years before it hit the headlines for all the wrong reasons all these weeks and came perilously close to being reduced to No Bank, Yes Bank stood tall and trusted for countless ordinary and not so ordinary account holders across India as a bank unlike any other: Cool, smart, savvy, professional, profitable and cheerfully at customers’ service 24x7. Coming as this high-sounding certificate does from a long-time Yes Bank account holder who actually had every reason to be fretting and fuming for days — yes, that’s me, with a lion’s share of my life’s savings eerily locked away inside its vaults until the moratorium clamped down on it by the Reserve Bank of India (RBI) on March 5 was lifted two weeks later — isn’t it a bit of an oddity ? Yes and no, as we’ll see. Like me, many customers’ journey with Yes Bank began after years of drudgery and misery that passed for banking in what now seems a medieval era. Opening an account at the Central Bank of India (founded 1911) was a Himalayan feat, accomplished after crossing numerous hurdles. To book a fixed deposit at the State Bank of India (SBI) — born in 1806 as the Bank of Calcutta before its reincarnation in 1955 as the SBI — you had to wait for hours in queues. Cashing a fixed deposit (FD) upon maturity at UCO Bank (circa 1943) was very like a striptease show as the FD receipt moved slowly, agonisingly, from one desk to another before bouncing back to you for want of a revenue stamp…. Arriving dramatically as it did in 2004 against this dismal backdrop, Yes Bank sounded too good to be true with its promise of internet banking, digital accounts, online deposits, balance alerts, round-the-clock helpline and, the cherry on the cake, highest interest rates.
Tempted but not quite trustful of such fancy talk, many chose to wait and watch before shifting their money to this Johnnie-come-lately who seemed straight from another planet. But when they did, they loved what they saw. Each fresh account, opened after multiple rounds of due diligence by officers visiting you to thoroughly verify and vet, came with a personalised chequebook, a global debit card and a warm letter from the CEO promising “a brand new experience in banking.” As customers discovered to their delight soon, a brand new experience it certainly was. In nine cases out of 10, an ordinary savings account got a “Yes First” upgrade with “zero balance” facility waiving the requirement for a minimum mandatory balance, a complimentary balance update by SMS (Short Message Service) first thing every morning, an e-mail alert after every transaction, any number of withdrawals from your account at any bank’s ATM (Automated Teller Machine) without a charge, unlimited electronic money transfers without a fee, instant transfer of FD proceeds to your savings account on maturity…. Yes, much before it became fashionable to gush about the “ease of business”, Yes Bank introduced India to the “ease of banking.”
It was this quantum leap in banking culture — rather than just lure of higher returns through higher interest rates — that drew many to Yes Bank. Other banks were quick to follow suit with different offers but these proved to be half-baked. The SBI, for instance, jacked up interest rates for senior citizens a wee bit but backtracked soon after. ICICI Bank came up with “Privilege Banking” add-ons but with riders: A minimum balance of Rs 10,000, with penalties for violations. Bandhan Bank brandished an international debit card but only for customers with balances above Rs 25,000. For many senior citizens looking to park their retirement corpus of Gratuity and Provident Fund (PF) — running generally into lakhs — the SBI had been the best bet for long with a surety of safe returns. As this captive clientele grew over the years, the SBI, under Arundhati Bhattacharya started lowering interest rates to shore up its profit margins. This drove many customers to ICICI Bank and Yes Bank. Soon ICICI under Chanda Kochhar, too, started reducing interest rates, pushing more and more accounts to Yes Bank. With Yes Bank maintaining its interest rates all along and upgrading services constantly to next levels, these customers stayed on and they were the ones who ironically got trapped in the nightmarish moratorium for two suspenseful weeks.
By all accounts the due diligence that went into the screening of these small fry didn’t extend to big bulls and their borrowings. Whether it was limitless greed for big bucks to bolster the bank’s coffers or no-holds-barred malfeasance for Big Boss’ personal ends that brought the bank to this sorry pass, will hopefully come to light after ongoing investigations into wide-ranging allegations of omission and commission.
Meanwhile, thanks to swift fire-fighting by the Government, the road ahead looks safe and clear for depositors, investors and other stakeholders. After years of poor oversight, the RBI eventually did well to come up with the Yes Bank revival package the way it did to put it back in business. But what now for Yes Bank 2.0? The SBI Chairman, Rajnish Kumar, put it best when asked if Yes Bank’s troubles dating back to founder Rana Kapoor’s days hadn’t damaged the brand. “We must clearly distinguish,” he reasoned, “Yes Bank is an entity; Rana Kapoor is an individual. If an individual has done something wrong, he will pay the price for that. Why should the enterprise suffer?” Yes, why indeed?
(The writer is a senior journalist and seasoned money-watcher)