YES Bank will stay away from large corporate borrowers: CEO

Says foreign firms keen to invest in proposed ARC

YES Bank intends to stay away from large corporate businesses as it looks to rebuild its loan book in the mid- and small-corporate segment, according to Managing Director and CEO Prashant Kumar.

Kumar acknowledged YES Bank had, like some of its peers, seen increased stress in its retail segment, which had touched nearly 3 per cent in this financial year compared with 1 per cent during pre-coronavirus times, but said things were improving.

"Stressed loans in both retail and corporate have peaked and as far as asset quality is concerned, the bank is completely out of the woods," he told Reuters in an interview late on Tuesday.

The private lender said it is seeing interest from foreign firms keen to invest in the asset reconstruction company (ARC) it plans to launch to hive off soured loans worth ~50,000 crore ($6.86 billion).

"There has been lot of interest from foreign investors for our ARC business. We are likely to put in initial capital of ~1,000 crore while the foreign investor will put in nearly ~2,500 crore," Kumar said.

YES Bank had applied to the Reserve Bank of India (RBI) for regulatory approvals in September to launch the ARC and Kumar said they believe they will operationalise it within six months of securing clearances.

The lender, which was rescued last year after its financial health deteriorated significantly, had been placed under a moratorium by the central bank.

State Bank of India and several private lenders stepped in to infuse money into the lender and bail it out to address systemic risk concerns.

"If they can get a credible foreign partner, it will be a good start," said an analyst at a foreign brokerage firm, adding the move would strengthen the bank's balance sheet despite the capital outlay required in the ARC.

We are likely to put in initial capital of ~1,000 crore while the foreign investor will put in nearly ~2,500 crore (in the ARC) ... if they can get a credible foreign partner, it will be a good start” PRASHANT KUMAR Managing Director and CEO, YES Bank