We are working towards doubling our deposit base

Interview/ Prashant Kumar, MD and CEO, Yes Bank

56-prashant-kumar

In March, the Reserve Bank of India’s decision to supersede the board of Yes Bank and impose a moratorium on deposit withdrawals amid a surge in non-performing assets sent shock waves across the sector. Soon, a first-of-its-kind public-private partnership effort was mounted and Prashant Kumar, CFO of State Bank of India, was appointed managing director and CEO of the bank. SBI and seven other private banks together invested Rs10,000 crore, and Rs15,000 crore was raised through a further public offer (FPO). Eight months later, the bank is on a much more stable footing. In an exclusive interview with THE WEEK, Kumar talks about the challenges and the targets. Excerpts:

Q/You took charge at Yes Bank at the toughest time in the bank’s history. What is the progress in the turnaround?

A/The bank’s transformation has been thoroughly fulfilling. We have seen a pair of significant firsts. One, the bank has been re-energised despite a slowdown around the globe. Two—and this is something exceptional because it is unprecedented in the history of banking in India—top financial institutions came together to provide support to another bank which retained its individual identity.

Reinvigorated efforts and focused steps on the part of the bank have ensured remarkable outcomes. Within four months of taking a new direction on March 18, we raised Rs15,000 crore through FPO in the face of the socioeconomic upheaval caused by Covid-19. Moreover, the bank has, before time, repaid the Rs50,000 crore provided by the Reserve Bank of India as a special liquidity facility. The bank has reported second quarter operating profit at Rs1,360 crore (up 18.6 per cent quarter-on-quarter), profit after tax of Rs129 crore and a deposit growth of 15.7 per cent quarter-on-quarter and 28.9 per cent over six months (Rs1,35,815 crore).

Ratings agencies like Moody’s, CRISIL, ICRA and India Ratings have acknowledged the strides made by the bank by upgrading its rating: the bank’s liquidity position, financial strength and improvement in capital ratios are now comfortably above the regulatory levels.

Q/The biggest issue Yes Bank faced in March was lack of confidence among its customers. People had been withdrawing their deposits. How did you solve this?

A/The exemplary commitment of the bank’s employees to render seamless services to our customers, especially during the initial stages of the lockdown, played a crucial role in deepening customer and depositor confidence. Yes Bank has differentiated itself from competitors by adopting and investing in technology ahead of time. With agility, we were able to fulfil the evolving needs of the customers in the new normal instated by Covid-19.

Q/Since you took charge, you have talked of turning the bank into a retail-focused bank. How is this going to pan out?

A/We are working towards fortifying the balance sheet and doubling our deposit base by the end of this financial year. We also aim to increase the loan book by 10 per cent in this financial year and 20 per cent in the next. On the retail side, we are targeting to add at least one lakh customers every month from the 60,000 we are adding at present. This is alongside the target of growing the retail and MSME advances to 60 per cent of the total advances from the current 44 per cent.

Our strategy to accomplish these objectives includes capitalising on growth opportunities while conforming to the highest standards of risk management, compliance and governance. The fundamentals of the bank are on a sound footing and we are absolutely on track to achieve the growth objectives.

The bank recently launched a host of user-friendly digital-first services such as WhatsApp banking, digital overdraft against fixed deposits and a self-service portal. This is in addition to providing digital savings account opening, easy access to finance for customers, digital personal loans and providing higher interest rates.

The green shoots of success in retail and MSME segments are now clearly visible. We are targeting to lend 010,000 crore to the retail/MSME segments in the third quarter of FY 2020-21.

Q/Covid-19 is expected to hit the banking industry hard and non-performing assets are expected to rise. How is Yes Bank going to navigate the wider crisis?

A/We created a cumulative standard asset provisioning of well over Rs800 crore in the first quarter; in the second quarter, the overall Covid-related provisioning has been stepped up to Rs1,918 crore. We definitely have recovery targets for the entire stressed book. And it is a matter of timing, because with Covid-19, the targets expected during the current fiscal are slowing down a bit. However, we have recovered more than 01,000 crore in the first half of FY21.

Going forward, we will see improvements. As more and more economic activity begins to get normalised over the next few quarters, India’s economy will get back to pre-lockdown levels and things will look up.

Q/Yes Bank has always been strong in digital tech. How will it leverage it at a time when there is growing competition from fintechs and neo banks?

A/Underscoring its digital focus, Yes Bank will boost its efforts to solidify its position in the digital retail and API corporate payments space through partnerships—guided by the A.R.T. approach, which utilises the advantages of alliances, relationships and partnerships.

The bank has joined forces with leading fintechs and other stakeholders in the ecosystem to create digital solutions that add value to the customer journey and provide a robust framework to safeguard customer interests. 

TAGS