The regulator’s approval is the only one pending as the bank’s board and shareholders have voted in favour of the stake sale, Kumar said in an interview.
“RBI never gives you a timeline (on approvals), but definitely, as a regulator, they have to do their due diligence processes, which they are doing. It should happen in a month or two," said Kumar.
On 24 August, shareholders approved the fundraising proposal at an extraordinary general meeting. On 29 July, the bank said its board approved the fundraising by selling shares and warrants to private equity investors Carlyle Group and Advent International. These investments would give Carlyle and Advent as much as 10% each in the bank once the warrants are converted into shares. Under RBI regulations, any stake sale over 4.99% in a private bank to an investor requires regulatory approval.
The capital raise, among the largest by a domestic private lender, will enable Yes Bank to enhance its capital ratios by more than 400 basis points and put it among the banks with one of the highest capital ratios. Yes Bank’s total capital adequacy ratio stood at 17.7% as on 30 June.
With capital in sight, the bank plans to grow faster than the industry. After several quarters of lull, bank credit growth has picked up pace, aided by an ever-growing demand for retail loans and supported by a fledgling corporate credit demand.
As a result, outstanding non-food bank credit stood at ₹124.3 trillion as on 26 August, up 15.9% from the same period last year, showed data from the Reserve Bank of India (RBI).
“For the last two years, on loans as well as deposits, we have been growing more than the market rate, and that is why our market share has improved. We would continue to grow at a higher pace than the industry," said Kumar, adding that the bank would not be overly aggressive.
“Suppose the industry is growing at 20% in credit, at most you can grow at 25% or 30%; but if you are growing at 40-45%, it would mean taking a very high risk. We would be growing, but cautiously. We would continue to gain market share on both loans and deposits, but gradually," he said.
Asked about the bank’s strategy in regrowing its corporate loan book, Kumar said Yes Bank has not stopped corporate lending and just has a greater focus on retail and small business loans.
In fact, retail loans constituted 62% of the loan book at the end of the June quarter, up from 47% in the same period last year.
“If you see, our total corporate book has shrunk because there were some prepayments owing to the liquidity situation. Some prepayments were also triggered by the bank as we were not comfortable," said Kumar.
The bank is growing in all segments, but definitely there are more opportunities in retail and the micro, small and medium enterprise (MSME) space.
“As a strategy, our corporate loan growth would be granular, and we are not going to write ₹4,000-5,000 crore cheques. If it is a very good credit (AA or AA rated), then we would put in about ₹500-1,000 crore," he said.
