MUMBAI: Yes Bank’s board on Tuesday approved a proposal to raise Rs 10,000 crore through issue of equity or equity-linked instruments. The bank had said that it will now seek approval from shareholders.
If the move is cleared, it would in effect be an extension on the current shareholder approval that expires on February 8, 2022.
The private bank had said that it would aim to reduce its non-performing assets to zero by the end of the current financial year. In an analyst call in October, the bank MD & CEO Prashant Kumar had said that it would be investing 20 per cent in a new asset reconstruction company that will acquire the bank’s bad loans. Kumar told analysts that there is adequate capital in terms of common equity tier-1 (CET) at 11.5 per cent and the overall capital ratio of 17.6 per cent.
Kumar had said that a lot of management bandwidth was getting utilised for recovery and transferring the bad loans would free the management to focus on growth. While raising capital strengthens the bank’s fundamentals, a bloated equity base makes it difficult for it to service the equity and generate returns for shareholders, particularly when credit growth is sluggish.
