Private sector lender Yes Bank is investing Rs 800 crore to Rs 1,000 crore annually to strengthen its information technology infrastructure, according to managing director and CEO Prashant Kumar in an exclusive interview with Moneycontrol.
IT as a Core Strategy
Kumar emphasized that IT has been crucial for the bank, even during challenging times. He highlighted the importance of IT for the safety of the financial institution, stating, “All bank customer data is on IT. Without a solid IT division, there would be a problem.”
Path to Stability and Growth
Kumar detailed the bank’s journey to stability, including building a microfinance business and implementing corrective actions. He noted that regaining customer confidence during the COVID-19 period was critical, especially with the State Bank of India (SBI) coming in as a major equity holder, which bolstered depositor confidence.
Financial Improvements
Yes Bank raised $2 billion in equity in July 2020, and since then, deposits have been growing steadily. The bank has significantly reduced its gross non-performing assets (NPAs) from 16-17 percent to 1.7 percent, with net NPAs currently at 0.55 percent. Recovery efforts have yielded over Rs 5,000 crore annually in the past four years.
Deposit Growth
In FY24, Yes Bank saw a 23 percent growth in deposits, surpassing many peers. Retail deposits now make up around 65 percent of the total, while wholesale deposits account for 35 percent. The current and savings account (CASA) ratio has been maintained despite industry-wide declines.
SBI Stake and Strategic Investors
Regarding SBI’s potential exit as a shareholder, Kumar explained that regulations prevent one bank from holding significant equity in another indefinitely. He assured that SBI would be replaced by strategic investors at the appropriate time, with proper due diligence by the RBI.
Microfinance Business
Yes Bank is keen to expand its microfinance business, both organically and through potential acquisitions. While no acquisitions have been finalized, the bank continues to evaluate opportunities.
Technology Investments
Kumar reiterated the bank’s commitment to technology, with ongoing investments of Rs 800 crore to Rs 1,000 crore annually. He underscored that a robust IT infrastructure is vital for handling large volumes of transactions and ensuring data security.
Partnership with Paytm
Yes Bank’s partnership with Paytm is thriving, with the bank handling about 1.2 billion transactions per month for Paytm, including wallet, UPI, and merchant payments.
Interest Rates and Treasury Income
Kumar noted that treasury income depends on interest rate fluctuations. The bank’s statutory liquidity ratio (SLR) holdings make up 89 percent of its total investment portfolio.
Outlook and Challenges
While the bank has made significant progress, challenges remain, particularly in meeting priority sector lending targets. However, Kumar remains optimistic, highlighting the bank’s strong leadership and continuous efforts to improve financial health and customer trust.
