Money & Banking

ATMs, branches full of cash, depositors need not worry: YES Bank

Our Bureau Mumbai | Updated on March 17, 2020 Published on March 17, 2020

Another round of capital raising likely in Q1

Ahead of the lifting of the moratorium on February 17, YES Bank today stressed that it has sufficient liquidity to deal with depositors and 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 is safe and urged them not to withdraw funds from the lender in a hurry.

Calling the assurance by the RBI Governor as a “positive move”, Kumar said he 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 the full ₹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 RBI and the Government, SBI has invested ₹6,050 crore in YES Bank and will hold 48.21 per cent stake in the lender.

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 will 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, amidst troubles.

Capital raise

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 there were a number of international investors 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 2020-21. “The current capital takes care of the regulatory capital requirement. The second round would partially take care of any shortage on regulatory side but will be used largely for growth,” said Kumar.

As part of the bailout plan, YES Bnak received about ₹10,000 crore from eight banks and financial institutions.

Rajnish Kumar also stressed that SBI will not sell any of its shares in YES Bank for the next three years.

AT1 Bonds

When asked about the status of AT1 bond holders, 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 Reserve Bank of India 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.

NPA

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 five 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 there will be strong efforts at recovery. He further said the third quarter results have recognized all the stressed assets.

Published on March 17, 2020

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