Private sector lender YES Bank is moving ahead with plans to set up its own asset reconstruction company (ARC). It has floated an expression of interest (EoI) for potential investors to partner with it in the venture.
“The prospective investor will be the lead partner or sponsor of the ARC, with the bank as the other significant partner/sponsor, for conducting the business of asset reconstruction...,” YES Bank said in a newspaper advertisement.
According to the advertisement, the prospective investor or their sponsors should have minimum assets under management of $5 billion in the immediately preceding completed financial year.
It should also have demonstrated ability to commit funds for investment or deployment in Indian companies or Indian assets of about $0.5 billion.
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The potential investor should also have demonstrated global experience of dealing in stressed asset space and established track record of turn around and resolution of distressed assets and non performing loans in the part.
The proposed investor should also meet the “fit and proper” criteria of the Reserve Bank of India.
It has given time till August 31 to potential investors to submit EoIs.
Ernst and Young is the process advisor to YES Bank.
In a previous interview to BusinessLine , Prashant Kumar, Managing Director and CEO, YES Bank had said that the lender had applied to the RBI for setting up an ARC with a controlling stake.
“The RBI is not comfortable with giving a controlling stake to a bank as it would be a moral hazard. Since they have set up a committee to look at the ARC framework, we will wait for the report and then approach the RBI based on the proposal,” he had said in the interview in May this year.
For the quarter ended June 30, 2021, YES Bank reported a 355 per cent jump in its net profit to ₹206.84 crore. Gross NPAs were at 15.6 per cent of gross advances as on June 30, 2021 from 17.3 per cent a year ago.