Crisil assigns A2 rating to Yes Bank's Rs 20,000 crore CD

Rating agency Crisil on Thursday assigned A2 rating to the Rs 20,000 crore certificate of deposit programme of Yes Bank Ltd.

The rating is underpinned by the expectation of continued extraordinary systemic support from key stakeholders, along with sizeable ownership of State Bank of India (SBI).

Crisil said it has taken note of the Yes Bank Ltd Reconstruction Scheme 2020 that was notified by the government on March 13.

The scheme followed the imposition of a moratorium on Yes Bank by the central government on March 5 under section 45 of the Banking Regulation Act 1949.

Pursuant to the scheme, key stakeholders, including the Reserve Bank of India (RBI), have put in place various measures to bolster the bank's liquidity.

While the moratorium was initially slated to continue till April 3, it has been lifted in 13 days on March 18 as per the scheme.

The scheme involves equity infusion of Rs 10,000 crore by eight entities, mainly banks led by SBI, and the reconstitution of Yes Bank's board with Prashant Kumar (former Deputy Managing Director and Chief Financial Officer of SBI) taking over as Managing Director and Chief Executive Officer.

"However, the ability of the bank to limit deposit outflow with the lifting of the moratorium, and to build a strong retail liabilities franchise along with a stable and sound operating business model with strong compliance and governance framework over the medium term, needs to be demonstrated," said Crisil.

"Furthermore, the bank's asset quality is weak and the impact of the shift in business model to focus more on granular retail segments will need to be seen over a longer period. These will be key rating monitorables," it added.