Yes Bank repays Rs50,000 cr to RBI; ICRA upgrades its bonds

Sunil Mehta, chairman of the bank, confirmed the development at the virtual annual general meeting of the shareholders held on Thursday.

“We have fully repaid the entire sum of Rs0,000 crore of SLF to RBI as on September 8,” Mehta told shareholders. The special liquidity line was extended to Yes Bank in March when it was coming out of the moratorium to make up for any large deposit withdrawals. The special window was first given for a three month period and later extended till mid-September, the chairman said.

With rising liquidity, ICRA also upgraded infrastructure bonds and Basel II compliant lower tier II bonds of Yes Bank to ‘BBB’ (Stable) from ‘BB+’ (Rating Watch). Basel III compliant tier II bonds were upgraded to ‘BBB-’ from ‘BB’. Basel II compliant tier I bonds and upper tier-II bonds were upgraded to ‘BB+’ (Stable) from a default (D) rating, Yes Bank informed the bourses in a filing on Friday.

ICRA noted the sizeable increase in capital of Rs15,000 crore in July, which has resulted in an improvement in the capital ratios of Yes Bank. This upgraded stable outlook will help the bank maintain its capital position above the regulatory levels.

Since Yes Bank’s reconstruction in March, it had received “strong customer liquidity inflows,” with deposits accruing on a monthly basis, the chairman said.

He also clarified in response to an investor query that neither the bank nor any authority had discussed a proposal for a merger with State Bank of India.

Addressing investor concerns about the bank’s decision to freeze their stake for a number of years after its reconstruction, Prashant Kumar, MD and CEO of the bank, said the decision to freeze shares for the next 3 years was taken in view of the larger interest of all shareholders.

The CEO said that the bank was able to bring down costs by almost 20 per cent in the first quarter, and has now appointed a consultant to look at medium and long term cost rationalisation. He said the decision to hold a virtual AGM had also helped the bank to save as much as Rs90 lakh. “It cost us Rs1 crore to hold the (physical) AGM last year, and this year it only cost us Rs10 lakh,” he said, adding that the bank would take guidance from its shareholders on whether to continue with this format.

Prashant Kumar said that a dedicated team of 80 people was working on recovery of legacy bad loans, and he hoped that a substantial portion of the book would be recovered over the next two to three years.

“We are working to expand the balance sheet size…We target to double the deposit base by end of the next financial year, and we Want to increase the loan book by 10 per cent in this financial year and 20 per cent in the next financial year,” he said, adding that the bank would target growing the retail book to 60 per cent of the total loan portfolio, from 45 per cent currently.

“We will ensure we do not commit mistakes of the past. Lots of steps have been taken to improve risk management practices and credit underwriting skills at the bank,” he told shareholders.