Ahead of the lifting of the moratorium on Wednesday evening, YES Bank, on Tuesday, stressed that it has sufficient liquidity to deal with depositors and that customers can conduct normal banking. The private sector lender is also likely to raise a second round of capital before the finalisation of its annual results.
“We have made adequate provisions. Our ATMs are full of cash. Our branches have adequate supply of cash,” said Prashant Kumar, administrator, YES Bank, stressing that the bank has adequate liquidity.
“There is no need for external requirement of liquidity. If required, then liquidity lines are available,” Kumar told reporters. RBI Governor Shaktikanta Das had, on Monday, assured depositors that their money at YES Bank was safe and urged them not to withdraw funds from the lender in a hurry.
A ‘positive move’
Calling the assurance by the RBI Governor a “positive move”, Kumar said the bank has done extensive analytics about customer behaviour and is not concerned about a run on deposits. During the moratorium, only one-third of the customers withdrew ₹50,000.
“In the last four days, we have had higher inflows than outflows,” he said.
State Bank of India Chairman Rajnish Kumar said it will not allow any situation to develop where YES Bank does not have enough liquidity. Under the reconstruction scheme by the Reserve Bank of India and the government, SBI has invested ₹6,050 crore in YES Bank and will hold 48.21 per cent stake in the lender.
Focus of the bank
Prashant Kumar said the focus of the bank will be to build on retail franchises, and teams on the grounds are already in talks with customers, assuring them of the safety of their deposits with the bank. The bank will also shift its focus from corporate to retail and look to change the portfolio mix to about 40 per cent corporate and 60 per cent retail.
YES Bank’s total deposits fell to ₹1,37,506 crore by March 5 this year from ₹2,09,497.34 crore on September 30 last year amid troubles at the lender. Speaking about fund-raising plans, Rajnish Kumar said it was consciously decided that the first round of funding for the bank would be from domestic banks, although a number of international investors were interested.
This was done largely as it was felt that the moratorium should be lifted as soon as possible, he said. YES Bank has time to do a second round of capital-raising, which can potentially be done in the first quarter of FY21.
“The current capital takes care of the regulatory capital requirement. The second round would partially take care of any shortage on the regulatory side, but will be used largely for growth,” said Kumar.
As part of the bailout plan, YES Bank received about ₹10,000 crore from eight banks and financial institutions. Rajnish Kumar also stressed that SBI would not sell any of its shares in YES Bank for the next three years. When asked about the status of AT-1 bond holders of YES Bank, Prashant Kumar said he would not like to comment as the matter is subjudice.
“Whatever has been done is as per the guidelines of the RBI and Basel III norms,” he said. The bank will examine if there was any mis-selling of bonds.
Under the reconstruction plan, YES Bank has written down ₹8,415 crore of such bonds. Prashant Kumar said the bank will focus on recovering about ₹8,500 crore to ₹10,000 crore next fiscal.
The guidance that slippages will be at 5 per cent of the assets in the next fiscal is the worst-case scenario, he said, adding that going forward, the credit cost will be nil and that there will be strong efforts at recovery.
He further said the third quarter results have recognised all the stressed assets.