Global credit rating agency Moody’s Ratings on Friday upgraded Yes Bank’s long-term foreign and local currency bank deposit ratings to Ba2 from Ba3, citing a gradual improvement in the bank’s overall credit profile.The agency also raised Yes Bank’s Baseline Credit Assessment (BCA) by one notch to ba3 from b1, reflecting better capital adequacy and strengthened loss-absorption buffers, Moody’s said in a statement.“The upgrade of Yes Bank’s ratings and BCA is driven by a gradual improvement in the bank’s credit profile, including its capital and loan loss reserves, which will provide sufficient buffers against unseasoned asset risks,” Moody’s said as quoted PTI. The agency added that the bank’s profitability and funding metrics are improving, albeit from modest levels.Yes Bank’s gross non-performing loan (NPL) ratio dropped to 1.6% as of March 2025, a significant improvement from 13.9% recorded in March 2022. Over the same period, provision coverage as a proportion of NPLs improved to 80%, up from 71%, reflecting stronger asset quality buffers.Despite these gains, Moody’s noted that the bank remains exposed to “unseasoned risks” due to its rapid expansion into the retail and small and medium enterprise (SME) segments, increased focus on higher-risk retail lending, and its reliance on third-party sourcing for loan origination.Moody’s said the Ba2 deposit ratings are one notch above the bank’s BCA of ba3, underpinned by the expectation of a moderate level of systemic support from the Government of India, which has a sovereign rating of Baa3 with a stable outlook.Yes Bank has undertaken a series of balance sheet clean-up and governance reforms since its reconstruction in 2020, following a Reserve Bank of India-led rescue plan backed by a consortium of Indian banks.