Yes Bank Crisis: The RBI decision to put a moratorium on Yes Bank came as a jolt to all customers and investors of the bank. But the signs of trouble were evident for several months in the run-up to the RBI decision.
Yes Bank Crisis: The RBI decision to put a moratorium on Yes Bank came as a jolt to all customers and investors of the bank. But the signs of trouble were evident for several months in the run-up to the RBI decision. If you are an aspiring investor, there are many lessons you can take from the Yes Bank crisis. Lalit Keshre, Co-founder and CEO of online investment platform Groww, told FE Online that the signs of trouble were evident about six months ago. Investors should keep a track on the fundamentals of the company. “Investors should sit up and take notice when the fundamentals of a company start changing. The poor Q2 results of YES Bank that showed an increase in gross NPA was a red flag in itself.”
Take note of lapse in corporate governance
Another thing that investors should pay attention to is the lapse in corporate governance. Whenever there is a hasty exit of upper management, disputes between promoters, instances of under-reporting and keeping vital information from investors, poor quarterly results, fall of share price by more than 50 per cent etc, then investors should seriously reconsider their decision of holding on to the shares instead of buying more shares at the reduced cost for averaging down their purchase price, said Keshre.
Take info from credible sources
For future investments too, investors need to pay heed to credible sources while assessing whether to exit a stock or not and take pragmatic decisions.
The news of RBI decision on Yes Bank also came as a challenge for online investment platforms like Groww, prompting immediate action.
“In such situations, prompt action is extremely important to ensure the least amount of inconvenience to our users. When the news broke, we realized that we are dependent on the YES Bank infrastructure and would need a quick solution to the problem at hand if we want our operations to go on smoothly,” Keshre said.
“We assembled a task force for this purpose that worked tirelessly with Axis bank and ICICI team for a seamless migration. The timely intervention and effort of team made sure none of the orders were impacted the next day and our customers will able to invest without a hitch,” he added.