YES Bank Limited crossed a major balance-sheet milestone in the second quarter of the fiscal year ending September 30, 2026, with gross loans and advances climbing 23.8% year-on-year to ₹3,09,675 crore (approximately ₹3.10 lakh crore). According to provisional regulatory disclosures submitted to stock exchanges on October 5, 2026, the private sector lender expanded its loan book from ₹2,50,077 crore in the corresponding period of the previous fiscal year, driven by steady credit appetite across retail, small and medium enterprises (SME), and corporate loan segments.
Deposit mobilization also maintained healthy momentum, rising 19.5% year-on-year to ₹3,54,084 crore compared to ₹2,96,252 crore recorded twelve months prior. However, the faster expansion of wholesale term deposits compressed the lender’s low-cost Current Account Savings Account (CASA) ratio, which slipped to 30.0% from 33.7% a year earlier.
The provisional metrics provide an initial operational health check for the bank ahead of audited board results, supported by recent auxiliary capital inflows, including a ₹363 crore income-tax refund and a ₹258 crore cash recovery from its legacy non-performing asset (NPA) security receipts portfolio sold to JC Flowers ARC.
Key Takeaways
- Loan Book Crosses ₹3 Lakh Crore: Gross advances rose 23.8% year-on-year to ₹3,09,675 crore, up 3.3% sequentially from ₹2,99,754 crore in the June quarter.
- Deposits Expand Near 20%: Total deposits climbed 19.5% year-on-year to ₹3,54,084 crore, registering sequential quarterly growth of 4.3% from ₹3,39,360 crore in Q1.
- CASA Ratio Under Pressure: While low-cost CASA deposits grew 6.6% YoY to ₹1,06,255 crore, the CASA ratio contracted to 30.0% (down from 32.7% in Q1 and 33.7% in Q2 of the prior year) due to strong growth in higher-cost term deposits.
- Credit-to-Deposit Ratio (LDR): The bank’s loan-to-deposit ratio expanded slightly to 87.5%, reflecting active credit deployment that marginally outpaced deposit gathering.
- Balance Sheet Recoveries: The quarter benefited from non-operational liquidity gains, including a ₹363 crore tax refund order and ₹258 crore recovered from legacy bad-loan trust receipts.
- Market Reaction: YES Bank shares gained over 3% in morning trade on the BSE to touch an intraday high of ₹21.22, reflecting positive investor sentiment regarding balance-sheet expansion.
YES BANK Q2 PROVISIONAL BALANCE SHEET SNAPSHOT (YoY VARIATION)
GROSS ADVANCES (Loans)
[+23.8% YoY] ₹3,09,675 Cr vs ₹2,50,077 Cr ▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲ (Crosses ₹3L Cr)
TOTAL DEPOSITS
[+19.5% YoY] ₹3,54,084 Cr vs ₹2,96,252 Cr ▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲
CASA DEPOSITS
[+6.6% YoY] ₹1,06,255 Cr vs ₹99,678 Cr ▲▲▲▲▲
CASA RATIO (%)
[-370 bps] 30.0% vs 33.7% (Prior Year) ▼▼▼▼ (Term Deposit Dilution)
Source: YES Bank BSE/NSE Regulatory Filings (Quarter Ended September 30, 2026)
The Mechanism of Loan Growth: Balancing Corporate and Retail Underwriting
The expansion of YES Bank’s loan book beyond the ₹3 lakh crore mark illustrates the stabilization of its balance sheet since the Reserve Bank of India’s (RBI) Reconstruction Scheme in March 2020.
Under the leadership of Managing Director and CEO Prashant Kumar, the bank had initially shifted away from large, concentrated corporate balance-sheet exposures in favor of granular retail assets, auto loans, credit cards, and SME working capital. However, across recent quarters, the lender has selectively re-entered commercial project finance and mid-market corporate syndications, complementing its retail book:
THE CREDIT EXPANSION ENGINE
┌────────────────────────────┐
│ GRANULAR RETAIL & MSME │ ──► High-yield consumer credit, secured LAP,
│ (~60% of Portfolio) │ and SME working capital facilities.
└────────────────────────────┘
▲
│ BALANCED CREDIT ENGINE (₹3,09,675 Cr)
▼
┌────────────────────────────┐
│ CORPORATE & MID-MARKET │ ──► High-grade commercial lending, structured
│ (~40% of Portfolio) │ trade finance, and transaction banking.
└────────────────────────────┘
Sequentially, gross advances expanded 3.3% quarter-on-quarter, a deliberate moderation compared to the 17.7% sequential surge recorded in the June 2026 quarter (Q1).
Management noted that sequential growth figures reflect normalized credit absorption following the tapering of the RBI’s concessional USD/INR Forex Swap Facility for Foreign Currency Non-Resident [FCNR(B)] deposits, which had temporarily inflated early-year balance-sheet aggregates.
The Deposit Conundrum: Term Deposits vs. Low-Cost CASA
While top-line deposit growth of 19.5% outpaced the broader Indian banking system average (which has hovered between 11% and 13%), the internal mix of deposits highlights industry-wide funding pressures.
| Metric | Q2 (Prior Fiscal) | Q1 (June Quarter) | Q2 (Current Fiscal) | YoY Change (%) | QoQ Change (%) |
| Gross Advances | ₹2,50,077 Cr | ₹2,99,754 Cr | ₹3,09,675 Cr | +23.8% | +3.3% |
| Total Deposits | ₹2,96,252 Cr | ₹3,39,360 Cr | ₹3,54,084 Cr | +19.5% | +4.3% |
| CASA Deposits | ₹99,678 Cr | ₹1,03,260 Cr | ₹1,06,255 Cr | +6.6% | +2.9% |
| CASA Ratio | 33.7% | 32.7% | 30.0% | -370 bps | -270 bps |
| CD Ratio (LDR) | 84.4% | 88.3% | 87.5% | +310 bps | -80 bps |
Why the CASA Ratio Diluted to 30.0%
The dilution in the CASA ratio from 33.7% down to 30.0% highlights a common trend across Indian commercial banks:
- Household Capital Reallocation: Retail savers are continuing to move idle capital out of low-yielding savings accounts (which typically yield 3.0% to 3.5%) into fixed deposits offering 7.0% to 7.5% or direct equity mutual funds via systematic investment plans (SIPs).
- Wholesale Term Inflows: To fund loan disbursements running at a 24% annual pace, YES Bank had to rely on higher-ticket term deposits and certificates of deposit (CDs), which grew at a much faster rate than low-cost operational current accounts.
- Net Interest Margin (NIM) Implications: Because term deposits carry higher interest costs, the ongoing decline in CASA share creates margin headwinds. When audited earnings are released, analysts will look closely at whether higher loan yields were sufficient to protect the bank’s net interest margin within its guided 2.4% to 2.6% range.
Non-Operational Tailwinds: Tax Refunds and Bad-Loan Recoveries
Beyond organic customer operations, the quarter ended September 30 was bolstered by two auxiliary cash recoveries that strengthen the lender’s capital cushions:
- ₹363 Crore Direct Tax Refund: In late September, YES Bank received a formal assessment order from the Income Tax Department confirming a refund of approximately ₹363 crore (inclusive of statutory interest) related to historical assessment reconciliations.
- ₹258 Crore ARC Cash Recovery: The bank monetized ₹258 crore from a security receipts trust managed by JC Flowers Asset Reconstruction Company (ARC). In December 2022, YES Bank sold an unserviced legacy bad-loan portfolio of approximately ₹48,000 crore to JC Flowers ARC. Under the 15:85 security receipt structure, cash realizations from underlying borrower settlements flow back to YES Bank’s balance sheet, creating periodic provision write-backs and non-interest income.
These inflows provide capital relief, supporting the bank’s Common Equity Tier-1 (CET-1) and Capital Adequacy Ratios without requiring immediate equity dilution.
Strategic Context: SMBC Institutional Backing and Shareholder Dynamics
The bank’s operational scaling coincides with structural changes to its institutional shareholding roster. Japan’s second-largest financial conglomerate, Sumitomo Mitsui Banking Corporation (SMBC), has methodically expanded its strategic footprint in the lender.
┌────────────────────────────────────────────────────────────────────────┐
│ YES BANK OWNERSHIP REALIGNMENT │
├──────────────────────────────┬─────────────────────────────────────────┤
│ ANCHOR INSTITUTIONAL BACKING │ STRATEGIC IMPACT │
├──────────────────────────────┼─────────────────────────────────────────┤
│ Sumitomo Mitsui Banking │ • Acquired initial 20% stake; expanded │
│ Corporation (SMBC - Japan) │ to 24.22% following RBI approvals │
│ │ permitting up to 24.99% equity. │
│ │ • Provides access to global cross-border│
│ │ corporate clients and dollar liquidity│
├──────────────────────────────┼─────────────────────────────────────────┤
│ State Bank of India (SBI) & │ • Steady, orderly monetization of locked│
│ Reconstruction Consortium │ consortium equity following the expiry│
│ │ of statutory lock-in periods. │
└──────────────────────────────┴─────────────────────────────────────────┘
Following Reserve Bank of India approval permitting the Japanese megabank to hold up to 24.99% of YES Bank’s paid-up share capital and voting rights, SMBC increased its equity holding to 24.22%, cementing its role as the bank’s single largest shareholder.
SMBC’s presence provides institutional stability, access to Japanese corporate clients expanding into India, and international funding lines that help the bank underwrite larger corporate balance sheets without facing credit-rating constraints.
What Remains Uncertain Ahead of Audited Results
While the provisional figures confirm steady loan and deposit growth, several key asset-quality and profitability indicators will be determined during the board’s formal financial audit:
- Net Interest Margin (NIM) Compression: With the CASA ratio falling to 30.0% and term deposit rates remaining elevated throughout the July–September quarter, the market will monitor whether cost-of-funds increases compressed quarterly net interest income.
- SME and Unsecured Asset Quality: Following broad regulatory warnings from the RBI regarding elevated risk in unsecured personal loans and micro-credit, analysts will examine slippages and credit costs in YES Bank’s consumer and small-ticket lending portfolios.
- Treasury Performance: Fixed-income desks will monitor whether softening domestic 10-year benchmark government bond yields (trading near 6.75% to 6.85%) generated marked-to-market (MTM) treasury gains in the bank’s Available-for-Sale (AFS) bond portfolio.
What Happens Next
The full audited financial results for the second quarter of FY27 will be finalized later in October 2026, when YES Bank’s Board of Directors convenes to approve the financial statements following review by the Audit Committee and statutory auditors.
Key operational milestones to watch include:
- Audited Financial Metrics: Confirmation of headline Profit After Tax (PAT), gross and net non-performing asset (GNPA/NNPA) ratios, and net interest margins.
- Credit-to-Deposit Guidance: Management commentary regarding whether deposit acquisition will be accelerated to bring the 87.5% loan-to-deposit ratio closer to internal benchmarks.
- Corporate Syndications: Updates on large-ticket green energy, data center, and infrastructure project financing deals being executed alongside strategic partner SMBC.
Frequently Asked Questions
How much did YES Bank’s loan book grow in Q2?
YES Bank reported a 23.8% year-on-year increase in gross loans and advances for the quarter ended September 30, 2026, reaching ₹3,09,675 crore (up from ₹2,50,077 crore in the prior year’s second quarter).
What was YES Bank’s total deposit base for the quarter?
Total deposits increased 19.5% year-on-year to ₹3,54,084 crore, compared to ₹2,96,252 crore recorded during the same period of the previous fiscal year.
Why did YES Bank’s CASA ratio decline?
The CASA ratio fell to 30.0% from 33.7% a year earlier because growth in low-cost Current Account Savings Account deposits (up 6.6% YoY to ₹1,06,255 crore) was outpaced by rapid inflows into higher-yielding wholesale and retail term deposits.
What were the non-operational recoveries reported by the bank?
YES Bank received a ₹363 crore income tax refund order (including interest) and recovered ₹258 crore from a security receipts trust managed by JC Flowers ARC, which houses bad loans sold by the bank in late 2022.
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