‘Yes, we can’

From March 2020 to now, how do you see the achievement of your bank in terms of deposits, credit, profitability and branches?

At that point of time, the bank was facing multiple problems. Deposits had come down to an all-time low of almost Rs 1 lakh crore. Since then, deposits have moved to almost Rs 2.67 lakh crore. The growth has been extremely good, better than industry standards. The bank had a GNPA (Gross Non-Performing Assets) ratio of almost 18 per cent. That has come down to 1.5, and the net NPA ratio is only 0.5, which is one of the best in the industry. In terms of profitability, the bank is continuously delivering profits quarter after quarter.

The last time the bank saw losses was in March 2021. Since then, there has been profit in every quarter and each time it has been better than the previous quarter. If you see in terms of branches, we have opened 200 branches, 40 in this year alone.

Did you face initial challenges in the growth of deposits?

Because of the developments in the bank, going back to the same depositors was definitely challenging, and then came Covid. It was very difficult to reach out to depositors at that point of time. The way our entire staff worked during those difficult times, reaching out to customers, the bank has been able to infuse that confidence.

So, is everything back on track?

Absolutely, but the only thing slightly behind schedule is in terms of profitability. I think our profitability should also be at par with the competition.

Yes Bank’s deposit growth has always outperformed loan growth. Will this strategy continue in the near future too?

This is a very fundamental aspect that we are following from day one, and this will continue going forward.

The industry is witnessing increased stress on unsecured loans, particularly in personal loans and credit cards. What about Yes Bank?

We are also part of the industry. So, there have been some higher delinquencies on unsecured loans and credit cards. One silver lining is that our proportion of unsecured loans and credit cards to the total balance sheet is only 5 per cent. For some banks, it is very high.

What is the industry average?

It varies from bank to bank. There are banks that would say between 10 and 15 per cent. There are banks with even 20 per cent, but most of the banks would be upward of 10 per cent.

How’s your credit card business doing?

Every month, we are adding 50,000 new credit cards. We have been very cautious, growing carefully and not being very aggressive. Credit card is one product which is facing problems in the current times. So, I think everybody is only tightening the process around it.

It was reported recently that you are planning to increase your Net Interest Margin.

Our current NIM (Net Interest Margin) is between 2.3 and 2.4 per cent. One of the reasons why our NIMs are low is because 11 per cent of our assets are sitting in the RIDF (Rural Infrastructure Development Fund) of the institutions where the rate of interest is 2 to 3 per cent lower than the repo rate. We have to put that money into the RIDF because earlier the bank was not meeting the priority sector targets.

Now, because there is Rs 44,000 crore which is giving us say only 3 to 4 per cent rate of interest, it is a drag on our profitability. But since the bank is meeting all priority sector targets, it means going forward, there is no need to put any additional money into RIDF and whatever money is there, it would start coming back to us — 25 per cent of Rs 44,000 crore, which is Rs 11,000 crore, would come back to the bank during the current financial year before March. The remaining amount would be coming back to us in three to four years. At the same time, we are continuously controlling the cost of the deposits and we are giving loans where we are having a better market. Our immediate target would be that over a period of three to four years, our NIMs are in the range of 3 per cent plus.

What about the net NPA?

Our net NPA is 0.5 per cent, so this is almost one of the best in the industry.

What about expansion plans?

We plan to open 80 branches every year in the next five years. The immediate focus is in terms of delivering better profits and growing organically. Very soon, we will launch mobile banking app IRIS for the business community.

Would you favour branches or going digital as the long-term strategy?

It’s a combination of continuously expanding the physical footprint, but at the same time, giving the convenience to customers for doing all their banking transactions on a mobile application.

Do you see further consolidation in the banking industry?

The consolidation has already happened on the public sector side. There are 12 public sector banks now. So, if we see the statement made by the government in Parliament, there is no such plan.

How do you see the recent announcement of RBI’s Monetary Policy Committee (MPC)?

It was on expected lines. The MPC even earlier was clear that the rate of interest would start coming down only if they are able to control inflation. The current inflation is well above the tolerance limit of RBI.

How do you see the overall economic situation?

The GDP number for one quarter has come down but if we see over a long period of time, our growth has been good, and the economy is doing very well. Overall, things are extremely good, especially in the

context of the global situation.