The Hindu Business Line : YES Bank finds agri-lending profitable

Chennai, March 31 YES Bank, for one, has no problems lending to agriculture. It has built an agri-loan portfolio of about Rs 2,600 crore — about a fifth of its total loans. Recoveries? 100 per cent.

According to Mr Somak Ghosh, President, Corporate Finance & Development Banking, the bank has devised a model for agri-lending — it lends through those entities that buy agricultural produce. For example, it could be a retail chain company buying fruits and vegetables from farmers. Indeed, in one instance, Yes Bank worked with a company that bought honey and lent to those who collect honey from the wild.

Because both offtake and payment is guaranteed, YES Bank has found it easy to enter into back-to-back arrangements with the farmers so that the loan repayments could be deducted from farmers’ dues.

Other ventures

Mr Ghosh told Business Line recently that the bank’s micro finance portfolio had grown to Rs 140 crore in about six months since it began micro lending in August 2007. YES Bank, which has created a NBFC subsidiary for this purpose, intends to focus on urban micro finance.

YES Bank also intends to grow big in loan syndication. It began this business in April 2006. According to Mr Ghosh, till now the bank has done 16 transactions involving Rs 2,500 crore. Mr Ghosh was not willing to share how much of fees YES Bank earned from this, but said that the industry norm was one per cent of loans arranged.

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