Yes Bank to focus on retail and MSMEs

On the retail side, we have already reached 70% of the normal collections, that is the pre-moratorium collection, says Prashant Kumar, MD & CEO. How would you look at the moratorium numbers considering that the second phase is going on?People don't understand this part and some are giving answers that others want to hear and that may not be correct. Unless economic activities revive, we can’t expect people to come and pay the entire instalment with interest. Maybe, somebody would pay a small portion but there are issues. All around, there’s a lot of economic activity and these are positive developments but we would be wrong to assume that everything has returned to normal. What were the updates as far as this quarter goes? For a bank which was under moratorium just four months back, not only have we been able to register a very decent deposit growth and maintain the liquidity coverage ratio, we have also managed to return almost 50% of the borrowings from the Reserve Bank of India. We have also been able to raise Rs 15,000 crore through one of the largest FPOs in the country. With the liquidity position improving, now we need to grow on the loan side. How the pandemic situation evolves will have an impact on loan growth and asset quality. Where will Yes Bank focus and which sectors will it avoid for lending?We have made our strategy very clear for the time being. We would like to grow on the retail and MSME side. We would like to take a pause on the corporate loan side and maybe after a year or so, when things turn normal, we would look at the corporate space also. But for the time being, our focus will be on retail and MSMEs.RBI has come out with a report on NPAs. Do you believe that this is warranted?RBI has these data points from the entire banking industry, they know how to forecast, they have huge experience and expertise. So, the financial stability report which has come out is giving the picture of the current economic situation in the country and depending on the individual situation in the bank, the quality on the asset side would evolve. What we are seeing in our book is that on the retail side, we have already reached 70% of the normal collections, that is the pre-moratorium collection. Similarly, on the credit card side we have already reached 90% of our pre-moratorium collections. Another very positive development which we are seeing on the MSME side is the churning in the MSME book, which was 30% in April improved to 43% in May and 61% in June. Another very positive development is that 83% of the customers who availed the moratorium on the MSME space, there the churning is more than the interest obligation from April to June. It means economic activity has started and customers have started routing their sales proceeds. Where are the funds coming in for repayments? How will this pick up?As per our internal calculation, there is no need for the bank to come to market for at least next two years and this is a minimum. But if things improve faster than expected and since we are having additional capital which is sitting in our deferred tax asset and if the recovery from the stressed assets also come during this time, then the current capital would take us even for longer than two years. How long are you needed to take care of this sort of capital needs? Prashant Kumar: I would not comment on this. We are seeing economic activities coming back but there are three sectors which are very severely impacted because of Covid -- one is real estate, another is the hospitality sector and the third is aviation. Barring these three sectors, we are seeing activities coming back but definitely it would take some time to come back to normal levels. What are the green shoots visible in the economy? Which are the sectors that are severely impacted that may take a little time to recover?Prashant Kumar: Both the government and Reserve Bank of India have taken adequate steps. Now all of us from the bank and the corporate side need to contribute to this. I definitely think some more hand holding would be required. So, unless they are coming back to normal economic activities, some more handholding would be required from the regulators and the government.