SMBC deal gives ability to tap MNCs, boost other income: YES Bank MD

YES Bank MD, CEO Prashant Kumar

What are the synergies you see forming with SMBC?

 First, if you see the presence of SMBC in India, it has three branches and Gift City branch. The Gift City branch takes care of very large corporates. Then it has an NBFC which has more than 1,000 outlets in semi-urban and rural areas, where they take care of the very small size MSMEs, agriculture loans and retail loans. The missing piece is commercial banking, SMEs and liabilities. Further, it is important to have capability to service corporate needs. Today you don’t just give a loan to a corporate. You need to provide them solutions for cash management, digital solutions, which they are not able to offer as of now. So after they become the largest shareholder in YES Bank, they will cover the entire financial spectrum in industry. Right from large corporates to bottom of the pyramid.

How does YES Bank gain?

It is handling more than 1,000 corporate clients, only on lending side. Whatever services are being offered, are not being offered through India branches but through overseas location. We are an Indian bank, and we are in position to offer those services to corporate clients, which is mutually beneficial to both parties. Today I cannot deal with multinationals due to my ratings. But if SMBC has a significant stake in our bank, whether our rating changes or not, multinational doors will be open for us, not for lending as it is being done by SMBC but we can take care of their clients’ service requirements. We can open salary account of their employees. Lending per se is not a very profitable business, more profitable is ancillary business.

If SMBC becomes a promoter of YES Bank, will SMFG merge its India NBFC arm with YES Bank?

..As per my knowledge of regulatory norms, current norms say that if a single promoter has two entities in the same line of businesses, they cannot continue with it…

Will growth plans change with new investor coming in?

 Not immediately. I think our growth plans would remain the same as of now. Once they become a part of the board, then definitely we would revisit our strategy and see whatever opportunities are available to us. Credit growth would continue to be at 12-15 per cent in FY26 and deposit growth would be slightly higher than credit growth.

Do you see funding cost falling in medium term?

Whenever our rating improves, the funding cost comes down. Whatever funds you raise from corporate bonds and other avenues, cost comes down. With a better rating, we will also have access to more corporates, which also brings down cost, as dependence lowers on some entities.

Will you opt for a re-appointment as the bank chief?

 As a regulated financial entity, you have to go through a process whenever the time of re-appointment or new appointment comes. The board has to follow a particular process and we are following it. One should not read anything other than this. In 2020, the government of India had appointed a four-member board to run YES Bank. As per the bank’s reconstruction scheme, after one year the bank’s board had to be reconstituted. Thus, the board was reconstituted in 2022 and now the board has started the process of my re-appointment or a new appointment. I always say that the biggest thing that we have achieved is building a franchise. If you build a good franchise, it would be able to deliver irrespective of whether you are there or not. I don’t think there should be anxiety in anyone’s mind whether I am there or not. We have been able to create a stable institution which will deliver on shareholder expectations.

Published on May 16, 2025