We hope to raise capital by June 30: YES Bank MD & CEO

“The fundamental model is correct, there is nothing wrong,” said Prashant Kumar, Managing Director and CEO, YES Bank, noting that the lender has made an operating profit even in the fourth quarter of 2019-20. In an interview to BusinessLine , Kumar said the bank has identified capital-raising, resolutions and deposit building as key priorities. Edited excerpts:

Earlier, we were targeting getting back to normalcy in 6-9 months, but now there is a bit of complication due to coronavirus and the lockdown. The timelines may be extended to one year. There are three main priorities — increasing deposits, raising capital and resolving and recovering bad loans.

We are looking for an RoA of 1 per cent in about 1-3 years. Profitability will be definitely there in the current fiscal year. Last quarter also, there was an operating profit. The fundamental model is correct, there is nothing wrong (with it). The fourth-quarter loss was only on account of provisioning. After 74 per cent, we don’t require more provisioning. Going forward, it will be done for whatever slippages there are.

We are already in the process; approvals are in place for raising ₹15,000 crore. Merchant bankers have been appointed. There are still SEBI and other approvals in process, so we will try to do it as soon as possible. Nothing has stopped due to the lockdown, as far as the bank is concerned. I am going to office on a daily basis. We are hoping to raise capital by June 30 and have approached SEBI for fast-tracking this. But if there is a delay, then it may go to July or August. We are looking for diversification of our investors. We are looking for long-term quality investors and we have got interest from some marquee names.

Our deposits were almost at ₹2 lakh crore as on September 30, 2019. The bank is very strong in customer connect and service. People just want a confirmation of the stability and safety of the bank. A lot of customers have started coming back, like PhonePe. Similarly, Reliance Jio’s entire cash management has come back to us. Investment from the SBI and other banks is also giving huge comfort to customers. But it is human nature, confidence takes time. This type of confidence will build up over time. But with the positive response we are getting, we are outreaching very actively to customers, so I think it should happen.

That is not happening. After March 31, it is more on the acquisition side. People have not closed accounts, they have taken money out.

Our bad loan recognition cycle has been completed and provisioning has been made. We are hoping to recover ₹5,000-8,000 crore. Earlier, normal business units were doing resolution and recovery. Now there is a separate vertical for recovery. We have augmented the staff with a team of 100 people, who are focussed only on recovery. There is more follow-up, focus and faster decision-making. We are also taking help from external experts, which are stressed assets funds.

In the short term, we can’t afford lending to corporates. It is not like we will not touch corporates, but because of liability and capital issues, it will be difficult in the short term. Also, it makes sense to diversify our portfolio. Once we are back on stronger footing on liability and capital side, then going forward, we will gradually start taking exposure on corporate side. We want our loan book mix to be 60 per cent retail and 40 per cent corporate. It is right not to inverse it at 60 per cent corporate and 40 per cent retail.

We are part of the economy. Going forward, we are hopeful that the RBI will extend the moratorium and give more comfort on the interest side. Otherwise, everyone will be affected, not just YES Bank. Some dispensation should come.

For large banks, it was easier to reduce on the deposit side. For banks like us, it did not make so much difference. But whenever interest rates are lowering in the system, we also get some advantage. We are also lowering our interest rates. From May 1, we have reduced the term deposits by 25 basis points.

Once the lockdown is lifted, there will be demand for credit but then again. But we will take a call on it depending on our own capital and liquidity position.

We have taken a decision on the basis of the regulatory guidelines, BASEL guidelines and legal advice. The decision has been taken and implemented and the matter is sub-judice, so I won’t like to comment on it.

Today, there is a gap between the loan book and the deposit book. It has been taken care partially by RBI support. We have said this gap cannot be built up so soon, so we have requested them to extend the facility by one year. By that time, we should be in a position to build up our liabilities. So far, we have not heard from the RBI on this.

We continue to be the market leader in the payments and digital side. A large number of customers who moved away from us during the moratorium have returned fully; like PhonePe has come back. The tech solution provided by YES Bank is much superior to that by other banks. It was very difficult for these customers to manage without YES Bank. Now, in addition to transaction, we are also using this data for analytics in terms of identifying potential customers for loan and deposits. This is very crucial data; if it is properly analysed, one can identify the people where the chances of deposits will be very minimal. Then the cost of acquiring customers will also come down. A team of about 100 people are working on analytics.