Yes Bank will transfer all bad loans to its arc by June, says CEO Prashant Kumar
NEW DELHI: Private sector lender Yes Bank plans to set up an asset reconstruction company is on track and expects to transfer all of its bad debts to the entity by the end of June, the chief executive said on Saturday Prashant Kumar.
“The process of establishing the Asset Reconstruction Company (ARC) and completing the transfer of legacy stress assets is well underway and we expect to complete it by the end of the current quarter,” said said Kumar.
As of March 31, Yes Bank’s gross bad debts amounted to ₹27,976 crores.
In August last year, Yes Bank issued a call for expressions of interest to set up the Asset Reconstruction Company (ARC), in which it plans to hold a 20% stake. The Reserve Bank of India (RBI) earlier rejected Yes Bank’s request to set up an ARC, citing conflict of interest. Following this, the mid-sized private bank tweaked the structure of the proposed ARC, proposing to hold a minority stake and find more shareholders to overcome the regulatory hurdle.
Mint previously reported that the private lender was in talks with US distressed asset investors JC Flowers & Co. and Cerberus Capital. However, Cerberus Capital reportedly made the highest bid of almost ₹12,000 crore for assets.
“The way we’re moving forward (in terms of ARC) is in line with regulatory requirements. There’s no disconnect between those two things,” Kumar said.
He said the bank was not trying to sell any of its assets to other asset reconstruction companies but was trying to get a partner to form an ARC where the bank’s stressed pool could be transferred in a way transparent.
Mint announced on April 22 that Yes Bank was exploring options to sell more ₹5,000 crore of bad debts to the new National Asset Reconstruction Co. Ltd (NARCL).
On Saturday, the bank posted a net profit of ₹367 crore, against a loss of ₹3,788 crores in the March quarter of the prior year. Its gross non-performing assets (NPA) as a percentage of total advances stood at 13.9% as of March 31, down 150 basis points (bps) year-on-year and 80 bps lower than the prior quarter. .
“Yes Bank returned to profitability with an annual profit of ₹1,066 crore, first full-year profit since FY19, vs. loss of ₹22,715 crore in FY20 and a loss ₹3,462 crores in FY21,” Kumar said.
The bank, he said, is the go-to digital bank, powering nearly one in three digital transactions in the country. This has enabled us to be the banker for a majority of fintechs and e-commerce companies in India, Kumar said.