Yes Bank moratorium: Market was unprepared; more likely liquidity issues than credit, says Kotak Mahindra AMC

Nilesh Shah, MD of Kotak Mahindra AMC and Punita Kumar Sinha, managing partner of Pacific Paradigm Advisors in an interview to CNBCTV18 spoke at length about the Yes Bank fiasco and its impact on markets.

“The market was not prepared for moratorium on Yes Bank and there was always a hope that there will be a bailout like Global Trust Bank. Now we have to wait for the developments to occur,” said Shah.

“One should realise that Yes Bank has combined net worth including equity capital, tier one and tier two bonds of Rs 51,000 crore. So it’s not a bank which has a huge credit issue; they are adequately capitalized for the same, maybe there are liquidity issue and this moratorium will help Yes Bank to iron those differences,' Shah said, adding that obviously the market’s reaction is going to be negative at the first sight because the second leg of the transaction, what will be the arrangement post moratorium has not yet been announced; a lot of rumours were circulating yesterday. So we will be waiting for the developments to happen on how this situation is handled post moratorium, he added.