Yes Bank cuts exposure to DHFL, sells Rs 500cr bonds


OCTOBER 25, 2020

Mumbai: Yes Bank has significantly reduced its exposure to DHFL by selling the troubled housing finance company’s bonds in the secondary market. The sale of these bonds has helped the private bank realise Rs 500-crore investment gains as the exposure was fully provided for.

“In DHFL, our exposure was in bonds. Part of it has already been monetised through a market sale and we have to see about the remaining bonds. These are essentially subordinated debt,” said Yes Bank MD & CEO Prashant Kumar. Lenders to DHFL will be meeting on Monday to decide on bids they have received for the company. “The recovery process has got elongated because of Covid. But we have still made a recovery of Rs 900 crore and expect a larger recovery during the current quarter,” said Kumar.

In an exclusive interview to TOI, Kumar said that on advances growth, the bank would continue to shift to retail through a twin strategy of de-risking portfolio on the corporate side and growing the retail book. As a result, the growth has been 1.5%, we will see further growth but it will be in single digits,” said Kumar.

The bank would be aggressive in growing its deposit base as it planned to improve the credit-deposit ratio from 123% to 100% by the end of the year. A flight of deposits before the takeover of the bank by an SBI-led consortium had resulted in the credit-deposit ratio crossing 163%.

To increase deposits, the bank planned to expand the catchment area of existing branches by acquiring customers digitally through video KYC. It would also target current accounts of corporate customers by offering them cash management services and it would use analytics to acquire customers who currently use the bank’s Unified Payments Interface (UPI) platform through its partnership with PhonePe.

While non-performing assets are expected to rise because of Covid, the bank has made adequate provisions, Kumar said. “We have already taken care of all legacy issues in March 2020. But Covid has caused some distress,” said Kumar. He said that around Rs 2,300 crore worth loans have slipped into default but were not categorised as non-performing assets because of the Supreme Court decision.

“Another Rs 4,000 crore, which is overdue more than 60 days, is at risk,” he added. These stressed loans would require provisioning of Rs 1,300 crore for the current year, against which the bank has made Rs 1,900 crore of provisioning for Covid stress.

To free up capital, the bank would sell its mutual fund by the end of the year. It is also working on setting up an asset reconstruction company-like entity, which will take over its bad loans and was currently talking to stressed asset investors.

Courtesy/Source: TOI