34478 - Yes Bank II

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Summary of Investment Information

Project Number

34478

Company Name

YES BANK LIMITED

Date SPI Disclosed

Nov 5, 2013

Country

India

Region

South Asia

Projected Board Date

Nov 25, 2013

Environmental Category

FI-1 - Significant

Status

Completed

Last Updated Date

Feb 10, 2022

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Dec 11, 2013
Signed : Dec 12, 2013
Invested : Dec 19, 2013

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

Founded in 2004, YES Bank Ltd. (“YES Bank” or “the Bank”) is the 4th largest private sector bank in India, with an asset base of c.US$18 billion (FY13). It has a widespread branch network of over 500 branches spread across 350 cities with more than 1100 ATMs. It is one of the fastest growing private sector banks, with the bank’s loan book growing at a CAGR of 38%, over the last 5 years. The Bank has steadily diversified and increased its SME and retail portfolio, which presently comprises 36% of its loan book. As part of its strategy, the Bank aspires to increase the proportion of the SMEs to 50% over the next five years.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Access to finance: MSMEs are a critical segment of the economy contributing 17% of GDP and responsible for 47% of total workforce in the Indian economy. At a time when most banks move to larger/safer credits, IFC''s dedicated MSME line will enable YES Bank to continue its program of reaching incremental MSMEs and agri customers. IFC''s credit line will deepen the partnership in this important market segment, enabling YES Bank to utilize its growing, high quality networks and execution capabilities to serve these high priority customers, which IFC cannot reach on its own. In addition, IFC funding will add the much needed resources to YES Bank''s MSME lending program enabling significant additional numbers of MSME and agri customers to be served.

Expanding Network: YES Bank plans to grow its branch network from the present 500 branches to 600 branches in FY14 and 750 branches in FY15. A part of the expansion will be in the low income states, and the expansion will primarily focus on increasing the Bank''s MSME, agri and retail franchise, in order to diversify its client base and increase savings mobilization.

Mobilization: At a time when there are almost no US Dollar funding in the markets, IFC will help YES Bank mobilize long term funding through syndications from its global network. With the IFC as lender of record, banks would be able to extend the tenors to up to 3 years, whose maturity is ideally suited to the asset book of YES Bank.

Long term funding: YES Bank runs an ALM mismatch in the short term buckets with its short term liabilities exceeding its short term assets, especially in the shorter end maturities. YES Bank needs to increase its long term funding to take care of this mismatch. At a time when long term credit has become extremely challenging, IFC''s long term funding will help the Bank better manage its ALM profile.

Strengthened partnership to further support the SME and agri sectors: IFC is partnering with YES Bank in various endeavors across investment and advisory segments. Its engagement with IFC in the advisory space is focused on the PPP markets in the agri sector, while the Bank has also signed an MOU with IFC to explore investment opportunities in the North East, especially to support the SME sector. In addition to these, YES Bank is keen on working with IFC to expand their direct farmer lending (priority sector lending) as well as in developing a Credit Scorecard for their MSME segment - to reach out to the underserved Mirco & Small Enterprises. This project further deepens IFC''s engagement with YES Bank strengthening the partnership in supporting the MSME and the agri sector through joint initiatives.

E&S Category Rationale / Risks and Mitigation

Category FI-1

The lending business of the bank covers the full spectrum of project finance, large corporates and SME finance, as several short term products. Overall, the existing lending portfolio comprises several high risk sector investments such as mining, power, petrochemicals, roads, cement, iron &steel, construction, etc. These sectors have a potential of generating adverse environmental or social risks or impacts which are widespread, irreversible, and unprecedented in several cases. Hence, the E&S risk of the proposed investment is high and the project is categorized as FI-1. The applicable Performance requirements will be i) the IFC- FI Exclusion List; ii) The host country E&S laws and regulations; and iii) the IFC Performance Standards.

Main E&S risk and impact of the project emanates from corporate banking, which includes corporate and project finance and typically has occupational health & safety concerns, fire and life safety, waste and pollution management, labor and community issues and land and biodiversity impact depending on the nature and location of the project/investment. As part of its existing relationship with IFC, the Bank has developed an E&S management system and provided E&S training to its staff. A senior management staff is responsible for ensuring implementation of the E&S management system. However, as per the latest review of the Bank’s E&S performance, IFC has identified deficiency in the SEMS implementation and proposed a corrective action plan to achieve full implementation of SEMS by March 2014. The bank is compliant with IFC Performance Standard 2 on Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Arun Agarwal
Group President
International Banking, MNC Relationship & Transaction Trade Banking
Yes Bank Limited
IFC, Tower 2, 18th Fl, Senapati Bapat Marg, Elphinstone (W), Mumbai 400 013, India
Phone +91-22-33479800
Email mailto:arun.agrawal@yesbank.in

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Formalize procedures		Completed	Completed	12/12/2013

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