Private-sector lender YES Bank, which is working on a turnaround after being bailed out in March 2020, has shifted its focus towards the retail business, a top official from the bank confirmed to DH.
The bank, which had earlier 60% exposure to the corporate loan, is now focussing on bringing it down to 40% in the course of the next couple of years. On the other hand, the retail portfolio, combined with the Micro, Small & Medium Enterprise (MSME) basket, would be raised to 60%.
“When you have a smaller balance sheet, it is better to have granular loans. They have a far lower risk than corporate loans,” a top banking executive told DH. The lack of demand for loans on the corporate side is also a playing factor for this shift in the bank.
The balance sheet size of YES Bank, till March this year, was heavily impaired due to the run on the bank, and as of date stood at Rs 2.5 lakh crore -- down 28% from Rs 3.5 lakh crore a year ago.
In the September quarter, the bank saw a strong pickup in retail disbursements, which stood at Rs 3,764 crore. The advances of the bank, as of date stand at Rs 1.67 lakh crore, while deposits stand at Rs 1.36 lakh crore.
The bank is not only focussing on retail assets on the assets side, but also on the deposit side. “This will help us improve our customer base,” officials said.
The bank expects the move to help improve its CASA Ratio as well, which as of date is 24.8%. “Most retail deposits come in the form of savings bank accounts -- which will buffer up our CASA ratio,” the officials said.
The bank is targeting a CASA ratio of 45% in the next couple of years.
CASA is the amount of money that gets deposited in the current and savings accounts of the bank -- the cheapest source of funds for banks.
It is pertinent to note that YES Bank, before its bailout, was facing a severe liquidity crunch, due to heavy defaults on the corporate loans side. On the other side of the prism, the corporate borrowers were the first ones to withdraw their monies from the bank, when the run on the bank started in October last year.
To prevent the bank from going insolvent, the RBI had to execute a last-minute bailout of the bank in March this year, as a gamut of private and public banks came together to infuse capital in the fund-starved Bank.