Prashant Kumar , the RBI-appointed administrator of Yes Bank, says the bank will emerge stronger post moratorium . Edited excerpts from an interview:
How fast do you think the moratorium can be lifted?
According to the RBI notification, April 3 is the outer date. We are expecting that, by this weekend, we will be in a position [such] that the moratorium could be lifted. We are working towards that.
How serious is the problem?
This bank has two separate components. One is on the retail side and the other is on the corporate side.
What I have seen is, on the retail side, the bank is quite strong. They are having very good systems and processes besides customer connect. And, good technology also. NPAs are very low on the retail side, they are [also] having very good earnings. On the corporate side, they have not taken care of the concentration risk. Loans have been given to entities and unfortunately, all these entities have become non-performing assets (NPAs). They have not been able absorb it.
Is it limited to a particular sector or some entities?
It is concentrated to few entities — 5-6 entities are there.
That itself is very high, because it is not a very large bank. For a small bank, you give loans like ₹10,000 crore, ₹5,000 crore and then, if everything becomes NPA, you cannot survive.
For a small bank, it is good have more focus on the retail loan side but here, the focus was on corporate side.
Normally, for a good bank of this size, my feeling is it should be 65% retail and 30-35% corporate. Here, it was the other way round. Corporate here was 65%.
What is your primary focus?
My first focus is to bring back normalcy. Today, customers are facing a lot of difficulties because of the restrictions. Customers should be handled carefully. That is important. I cannot give them more than ₹50,000, but I can give them the assurance, I can empathise with the customers.
Several steps have been taken. Our ATMs were available within 24 hours. And, from Saturday night onwards, ATMs of other banks were also available. Today, we don’t have much rush in the branches because they can withdraw from ATMs. Today, none of our branches is facing any cash crunch. Not a single customer has been turned away today. We have also started processing requests from customers for emergency situations, like a medical condition where we can disburse up to ₹5 lakh.
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How long will it take to start the NEFT?
NEFT inflows have started, so, somebody can send money. Earlier, that was also stopped. Because of the restrictions of not paying more than ₹50,000, we had to stop NEFT, RTGS etc.
What is the message to depositors?
First thing is, their deposits are safe and secure, they need not worry. Second, all of us are working to lift the moratorium so that they can do normal banking transactions.
Going forward, they are going to have a much stronger Yes Bank. So, there is no need to panic and shift deposits to other banks.
How healthy is the deposit franchise?
They were able to get deposits at a high rate. I would consider deposit franchise strong if you are able to raise liabilities at a market rate. But they were offering higher rate [on savings bank deposit]. On the liability side, we need to work more aggressively and raise the Casa [current and savings account deposit]. The Casa here is 30% but in other banks, the Casa would be more than 40%. We have to work on getting low-cost deposits and stable deposits.
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What is the kind of liquidity support the bank is getting from the RBI?
We have full support from the RBI and the SBI for liquidity.
Depositors could rush to the bank after moratorium is lifted. What will be your strategy?
We have started reaching out to customers. The biggest comfort has come from the SBI. When SBI is investing equity, and they say they are behind Yes Bank, then I think the fear among depositors should not be there.
Maybe, we are in a problem but the solution has been worked out so fast. The moratorium was imposed on Thursday night, and the draft plan came within 24 hours. And, when we are saying moratorium will be lifted by the weekend, the central government, the RBI is absolutely behind this. When the resolution has come so fast, it shows the intention and commitment of the government and the RBI.
Do you think eventually Yes Bank will be merged with the SBI?
I don’t think that is a correct interpretation, not a correct reading of the situation. If that has been the case, it could have been done in the first instance.
How much capital would Yes Bank need now?
That, we would be able to share when we announce the Q3 results on March 14.