Money & Banking

SBI, HDFC, ICICI Bank to remain invested in YES Bank

Hamsini Karthik |Surabhi | Updated on: Jul 03, 2022
As part of the reconstruction scheme, eight banks and financial institutions led by SBI had picked up stake in YES Bank in March 2020.

As part of the reconstruction scheme, eight banks and financial institutions led by SBI had picked up stake in YES Bank in March 2020. | Photo Credit: VELANKANNI RAJ B

The three investors unlikely to pare stake in the near-term

The board of YES Bank has proposed to exit from the reconstruction scheme but large investors, including the State Bank of India, HDFC Ltd and ICICI Bank may not pare down their stake in the private sector lender for now.

“Today, among the large institutional investors, there are SBI, HDFC and ICICI Bank. Others have already sold some portion. These three will continue with us,” said Prashant Kumar, Managing Director and CEO, YES Bank.

Reconstruction recap

As part of the reconstruction scheme, eight banks and financial institutions led by SBI had picked up stake in YES Bank in March 2020. As on March 31, 2022, SBI held 30 per cent stake, HDFC Ltd held 3.99 per cent stake and ICICI bank held 2.99 per cent equity shares in the lender. In an interaction with BusinessLine, Kumar noted that SBI is the most critical with 30 per cent equity.

“SBI has put money in this bank for the purpose of bailing out. Otherwise, theoretically, it does not make sense for a bank to remain invested in another bank to such a large extent,” he said. While it does not make sense for SBI to continue for a long time, a solution will have to be eventually arrived at where another investor may like to come in place of SBI. “But not immediately. Nobody is in a hurry,” Kumar stressed.

In a recent interview with BusinessLine, SBI Chairman Dinesh Kumar Khara had said the bank has not taken any formal call on easing out as a shareholder of YES Bank as of now. “But yes, we will evaluate when we will be nearer to that time,” he had said.

All eyes on AGM

The board of directors of YES Bank had, in June, recommended the formation of an alternative Board in line with the directions of the scheme, to its shareholders. The proposal will be taken up at its annual general meeting on July 15.

Explaining the reasons behind the decision, Kumar said the bank has registered a full year of profitability in 2021-22 with good growth in deposits and disbursements as well as progress in recoveries and resolution. Deposits have risen from ₹1.05-lakh crore in FY20 to ₹1.81-lakh crore in FY22 while the loan book which plunged to ₹77,301 crore in FY20 after all the write-offs, has almost doubled to ₹1.35-lakh crore in FY22. While deposits rose by 21 per cent in FY22 year-on-year, advances grew by 8 per cent during the year.

Customer service

“Now, we are not talking about what happened to the bank in the past. The whole conversation within the bank is in terms of now what we have to do. Nobody talks about how in 2020 the bank was under reconstruction,” he said. The whole focus of the bank and strategy is now in terms of focusing on customer service.

“We believe that one may be a large bank or a small bank, but customer centricity is the most important, both in terms of products and services, and also in terms of how you deal with them,” he said, adding that this has been a strength and the lender would like to continue building on it.

Published on July 03, 2022
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