Crisil said the upgrade in the short term rating reflects improvement in the funding and liquidity profile of the bank, with gradual increase in its deposit base as well as sizeable capital raised recently. With this, Yes Bank has repaid Rs 35,000 crore of the Rs 50,000 crore special liquidity facility availed from the Reserve Bank of India (RBI) in March 2020, which is ahead of the earlier plan. Further, the bank's liquidity coverage ratio (LCR) has improved in recent months.

The ratings continue to be underpinned by the expectation of continued extraordinary systemic support from key stakeholders and sizeable ownership by the State Bank of India (SBI).

Yes Bank's net profit tumbled 60.1% to Rs 45 crore in Q1 FY21 from Rs 114 crore in Q1 FY20. However, the bank has returned to profitability after reporting loss in the past three quarters. It had reported a net loss of Rs 3,668 crore in Q4 FY20. Net Interest Income (NII) fell 16.3% to Rs 1,908 crore in Q1 June 2020 from Rs 2,281 crore in Q1 June 2019. Net Interest Margin (NIM) stood at 3% in Q1 FY21 as against 2.8% in Q1 FY20.

Yes Bank was under moratorium for 13 days in March 2020. It resumed full-fledged banking operations from 18 March 2020. This came after a consortium of eight public and private banks, led by State Bank of India, agreed to infuse capital into Yes Bank to rescue it from the brink of a collapse. These financial institutions had together pooled in Rs 10,000 crore as investment at Rs 10 per share in Yes Bank when it faced pressure from depositors.