Mr. Rana Kapoor, the Bank’s founder is a graduate from the University of Delhi and an MBA from Rutgers University, with more than two decades of experience in the banking sector. In 2003-04, Mr. Rana Kapoor and his partner, the late Mr. Ashok Kapur, established Yes Bank along with Rabobank International. The sponsor group as on December 31, 2011 has a 26.21 percent stake in the Bank. Other major shareholders include (percent share in parenthesis): American Funds Insurance Series Growth Fund (4.85), HSBC Bank (4.77), Rabobank International (4.75), Titiwangsa Investments (4.17), Smallcap World Fund Inc. (2.56), Citigroup (1.03), JP Morgan (1.39) and LIC of India (2.39).

The project involves a 15-year subordinated debt (Upper Tier II instrument or UT2) of US$75 million to Yes Bank. The project is intended to support the Bank in (i) augmenting its capital base and to prepare it for Basel III implementation (ii) improving the Bank’s maturity mismatch position, and, (iii) growing its assets, increasing its reach and improving its market share especially in the SME and agricultural space.

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity

* These investment figures are indicative

Yes Bank is headquartered in Mumbai. The Bank plans to expand its branches to 350 by the end of FY2012 and to 750 branches by FY 2015. The expansion will help in the Bank in increasing its reach, particularly in the targeted sectors (SME and agriculture), and to increase savings mobilization.

The market segments focused on by Yes Bank overlap with some of IFC''s top priorities. Through this investment IFC will initiate and develop a relationship with a potentially important development partner. IFC will help refine the focus and strengthen the capabilities of the Bank in effectively addressing SMEs and agriculture customers as it expands its network and increases its exposure in these market segments.

Access to finance: The proceeds of IFC''s funding will be utilized by Yes Bank to finance its customers in the SME and agricultural sectors. IFC''s investment will thus ensure continued and increasing access to finance to the SME sector in increasingly challenging credit environment.

Supporting a private sector bank in the growth years: Yes Bank is a recently established private sector bank with 7 years of operations, and has demonstrated consistently good performance. Yes Bank was also the regional (Asia Pacific) winner of the 2011 FT/IFC Sustainable Finance awards. The Bank has ambitious plans to expand its branch network, broaden its footprint in smaller cities and grow its SME franchise. This project will support the long-term growth strategy of Yes Bank and improve its financial fundamentals.

Addressing the funding needs of a private sector bank in its expansion phase: Yes Bank''s future growth plans target the SME and agricultural sectors. The project provides the Bank capital to grow its business and reach, and prepare for the advent of Basel III norms. UT2 financing provided by IFC will enable the Bank to bolster its capital and enable it to continue on its growth plans despite a challenging capital raising environment.

Provide long-term financing to manage its balance sheet: IFC''s UT2 debt is expected to provide the Bank with long-term funding with a tenor and of amount that is currently not available in the international markets. IFC''s long term financing will help the bank to diversify its funding base and improve its asset liability profile.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC analyzed the bank''s portfolio for types of transactions, size and industry sectors and determined the Applicable Performance Requirements based on an analysis of the potential Social and Environmental risks associated with the bank''s portfolio and considering IFC’s investment which is 15-year subordinated debt (Upper Tier II instrument). The Applicable Performance Requirements are (i) The IFC FI Exclusion List(s); (ii) The applicable National Social and Environmental Laws and regulations; and (iii) The IFC Performance Standards.

IFC also appraised the Bank’s labor practices and reviewed its existing Social & Environmental Management System (SEMS) and the capacity to implement the same. It was found that the bank has a SEMS and some capacity. The labour practices of the bank were found to be satisfactory. However, the following Supplemental Actions apply:

The bank will upgrade its existing SEMS to enable the bank to identify, assess and manage the social and environmental risks in respect of bank’s operations in accordance with the Applicable Performance Requirements which includes IFC Performance Standards.
The bank will nominate a person(s) responsible for implementing the SEMS;
The bank will commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements; and
The bank will submit periodic reports to IFC as per a format(s) to be provided by IFC.

IFC will also review the implementation and performance of the Bank''s SEMS for the first few projects to ensure that the Bank''s SEMS is adequate to assess and manage E&S risks.