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Yes Bank to significantly raise SME portfolio

Mumbai, Feb 6 (KNN)  Leading private sector lender, Yes Bank is working on a plan to increase its SME portfolio, taking share of the business to small and medium enterprises to 33 per cent from 17 per cent at present, according to Group President and Country Head Amit Kumar.

The bank with balance sheet size to over Rs 1,00,000 crore, depends on large corporates for 66 per cent of its business. About 15 per cent of its portfolio comprises the mid-segment and only 17 per cent belongs to small and medium enterprises (SMEs).

“Over a period of time, we will be equally focused on SMEs and retail banking directionally. We want to see our business portfolio coming 33 per cent each from large corporates, mid-segments and SMEs,” Kumar told KNN.

The bank has recently raised USD 105 million from the International Finance Corporation for lending to SMEs. Kumar said most of the SMEs which are being serviced by Yes Bank are in any case part of the value chain along with the large corporate clients of the bank. “They are the distributors/suppliers of our large corporate clients”.

Some of the “sunrise” sectors for the bank include life-sciences, information technology, pharmaceutical, FMCG and parts of engineering.

“These sectors have remained relatively insulated from the stress that is seen in the banking sector,” Kumar said.

Yes Bank, which has jointly brought out a study paper on medical devices with EEPC India, also wants to rebalance its resources of deposits.

The bank, which is listed and traded on the stock markets, gets about 20 per cent of its deposits from the Current Account Savings Account (CASA) Kumar said: We want to take CASA from 20 per cent to 35-40 per cent in the next 12-18 months”.

CASA is considered to be the most cost effective source of bank deposits since the rate of interest paid on CASA remains around 6 per cent against over 8 per cent in time deposits.

Some of the well-run peers of Yes Bank have CASA up to 40 per cent and the Rana Kapoor-led bank would also like to tap this resource.

Kumar said that even though the CASA rates remain around 6 per cent, “For me, it is still cheaper replacing wholesale funding which costs between 8.5-9 per cent”.

For its deposits mobilization, Yes Bank has also tapped cost effective foreign currency resources. In all, the bank has managed to raise USD 400 million in different tranches of the swap window recently provided by the Reserve Bank.