Yes Bank has been struggling to raise capital. Current, the core capital ratio of Yes Bank is just about 8.7% against a statutory minimum requirement of 8%. That is an extremely precarious scenario as the bank does not have much room for further losses. In short, the bank needs to urgently raise equity capital if it has to sustain lending to customers and show any signs of recovery from current levels.

There was a commitment of $1.50 billion from Canadian investors but that ran into trouble after newspaper reports suggested that the investors had dubious backgrounds. There is also an expression of interest for an investment of $500 million by Citax Holdings but that is yet to be confirmed. Each passing day the capital does not get raised, the bank is slipping into a more troubled situation. There were also expectations that Rajesh Jhunjhunwala would participate with an investment of $25 million in the preferential offer but even that does not appear to be materializing in any substantive manner. The sharp correction in the stock price in the last week is due to the slow progress of the capital raising plans of Yes Bank. Unless Yes Bank is able to raise these funds quickly, it could have a tough time being able to continue in the business.