The turnaround for YES Bank has been much faster as it could usually take at least two to three years, believes Prashant Kumar, Managing Director and CEO, YES Bank. In an interview with BusinessLine, Kumar said the bank is hoping to continue with the growth in advances in the fourth quarter with good demand from retail and MSME segments. Edited excerpts:
How has the bank managed such a robust growth in net interest income?
Some of the recovery has been booked as interest income, which has given a boost to the NII. This robust growth in NII will continue but it will depend on whether you will make recovery for interest. This may not happen in all the cases; normally there is always a haircut.
How is the growth in advances?
We had set a target of ₹10,000 crore of disbursements in the third quarter for retail and MSMEs and we disbursed ₹12,000 crore. Corporate disbursements were at ₹2,000 crore. We are seeing demand from the retail and MSME segments but corporate demand is yet to pick up.
We were earlier lending to large project finance companies on the corporate side but we are not doing that as a strategy now as we don’t have that kind of size of balance sheet. But we will definitely participate in working capital requirement and small requirement of term loans like ₹300 crore on the corporate side but not very large. Aviation, hospitality and real estate have been impacted badly by the pandemic as well as sectors related to entertainment, and shopping malls.
For the fourth quarter, we have not kept a target on advances but would like to do the same as the third quarter.
How have operating expenses come down?
We are avoiding wasteful expenses. Due to the pandemic, we realised people can work from home. In our Mumbai building, we have vacated two floors from 12 floors and will be in a position to vacate another two floors in the coming months. Similarly, in Delhi, we have shifted our premises from Chanakyapuri and are moving to Noida.
So, will the bank go for branch expansion?
In terms of business growth, we need to expand the branch network. Till now, our branches have been concentrated largely in northern and western India. Our presence in southern, eastern and central India is very small. We need to wait for two to three quarters but we are coming out with a strategy of opening branches in the areas where we are not there. Branch expansion will be a part of the strategy but we need to wait and see the real impact of the pandemic.
Also read: YES Bank posts Q3 net of ₹151 crore
What about deposit mobilisation?
Growth on deposits is always a slow process. Earlier, YES Bank’s deposit was at ₹2-lakh crore plus. But at that time, there was a very large deposit book of the government, which has come down. Some States are not placing deposits with private sector banks and we are also not getting deposits from the Central government. The government deposit book was ₹45,000 crore but now it is only at ₹7,000 crore to ₹8,000 crore. On retail and corporate deposit book, we are back on track. Our focus will be to open CASA accounts.
What is happening on the bad bank proposal? Are you looking to sell off any NPAs?
We are waiting for regulatory approvals. We have not sold a single loan to any ARC (asset reconstruction company) and we have no plans. If we are able to set up our own ARC, then we will transfer it to our own ARC. Selling doesn’t make any sense, it brings in hardly 20 per cent. We are able to recover much more.
What are your expectations from the Budget?
Real estate has been impacted by Covid-19 and has been under difficulties in the last three to four years. Addressing this sector is important as a large number of people are also impacted. People are paying EMIs but not getting their flats. This sector, if taken care, will give a boost to infrastructure. Banks would be able to recover their loans and the government will also get huge taxes. Also, hopefully the Budget will continue to provide support to MSMEs. It has a big role in the GDP and needs support in terms of releasing payments, protection, and ease of doing business.