NBFC liquidity drought won’t hit Yes Bank: Ravneet Gill
New CEO says lender has provided for liabilities, foresees no nasty surprises due to NPAs or slippages.
Yes Bank will not be impacted by the liquidity crisis that has affected a few non-banking financial institutions, and there are unlikely to be any nasty surprises due to higher bad loans or slippages from its watch list, new CEO Ravneet Gill has said.
The private sector lender, which dropped out of the list of the top 10 most valuable banks on Thursday after rating and brokerage downgrades, has come clean on potential bad loans and provided for contingent liabilities, Gill said.
“I spoke to both our auditors and concurrent auditors, and whether they had looked at this aspect closely,” Gill told ET in an interview. “Both said they have gone really deep and found absolutely no linkages,” he said in reply to a question on speculation about Yes Bank’s dealings with Indiabulls Housing Finance, Dewan Housing Finance Corp Ltd and Reliance Capital.
‘Fears of More Bad Loans Unfounded’
“To the best of my knowledge, I do not see anything lurking and which has not been highlighted, which can move the needle,” Gill said.
Yes Bank shares fell 13% to a five-year low of Rs 117.20 on the BSE on Thursday over fears the lender could get caught up in the liquidity crisis plaguing companies such as Reliance Capital, Indiabulls Financial Services and DHFL.
There was drama at the bank’s shareholders’ meet on Wednesday over the possible return of cofounder Rana Kapoor to the board of directors. Brokerages had downgraded the Yes Bank stock on fears of a rise in stressed assets.
Fears of more bad loans are unfounded, Gill said on Thursday, adding that Yes Bank is not in the same league as other lenders that have faced problems of expanding ‘watch list’ because their industry-wise exposure ran into cyclical issues.
“The market looks at what happened when they came up with watch list,” said Gill. “In our case, there are a handful of names that are facing liquidity issues. These are not names that are in one industry or sector. There are resolutions underway. In some cases, it is asset sale. It may not be visible to the market.”
Gill also dismissed as speculation reports of Kapoor’s possible reinduction on to the board. “If you look at it from the point of view of being the largest shareholder, it is in his interest to see a stable board and a stable institution. I don’t see him doing anything that will destabilise that.”
Kapoor issued three tweets on Thursday, saying the promoter group fully supported and had voted in favour of all 19 resolutions at the bank’s 15th annual general meeting on Wednesday. “The leadership team, MD & CEO Ravneet Gill and Board of Directors have my fullest support,” Kapoor said.
ET had reported on Tuesday about Kapoor’s demand to be re-inducted on to the Yes Bank board.
Gill, the former head of Deutsche Bank India, took over in March and has been attempting to restore confidence in Yes Bank after the RBI refused another three-year CEO term to Kapoor. It is believed the regulatory action was due to compliance issues. At least five directors have quit the Yes Bank board in the past year — two of them this week.
But Gill said those issues were in the past, and that the bank has begun hiring to fill up the vacancies. He said many of the board panels, including the credit and nominations & remunerations committees, could be reconstituted to give comfort to investors.
“On the back of two exits that we have had, we will look to reconstitute the (board) committees. This is one of the points that was discussed given that we have three new members, including Mr Gandhi (former RBI deputy governor R Gandhi, who was appointed by the RBI to the Yes Bank board in May).”