YES Bank Managing Director and Chief Executive Officer Prashant Kumar, on May 24, said 25 percent of the bank’s investment in the Rural Infrastructure Development Fund (RIDF) is expected to mature in the current financial year. The maturity amount is expected to be around Rs 11,000 crore.
“25 percent of the RIDF investment will mature in FY25, and the remaining will come over the next two to three years,” Kumar said during an exclusive interview with Moneycontrol.
Currently, YES Bank has around 11 percent of its funds placed in the RIDF, which works out to be around Rs 44,000 crore, Kumar added.
Banks are currently required to lend 40 percent of the adjusted net bank credit to the so-called priority sector, or economically weaker sections such as agriculture, micro-enterprises, and other economically disadvantaged sections.
Also read: Yes Bank Q4 Results: Net profit jumps 123% to Rs 451 crore, asset quality stays healthy
When banks fail to meet this target, they invest an amount equal to the shortfall in RIDF.
Kumar said that due to this investment, banks have taken a hit on income because investment in RIDF fetches 2 percent lower interest than the repo rate, whereas the bank’s lending rates are much higher. The difference between the lending rate and the interest received on the RIDF investment impacts a bank's income.
In FY24, in their investor presentation, the bank said it will focus on accelerating organic sourcing in PSL (priority sector lending) sub-categories such as SMF (small & marginal Farmers), NCF (non-corporate farmers) and WS (weaker sections) by expanding distribution, manpower, and productivity.
Going ahead, Kumar said the bank is confident that there will be no future requirement for investment in the RIDF.
“In FY24, we have assured that there will be no short-fall. The previous money which has been placed in the RIDF everything has a maturity period. Whenever they will mature it will come back to bank. So, now I have assured that there will be no future demand,” Kumar said.
Also read: Yes Bank seeks new promoter, eyes $8-9 billion valuation: Report
In January-March '24 quarter, the lender had reported a net profit of Rs 451 crore, which marks a 123 percent jump compared to the Rs 202 crore clocked in the year-ago period.
The bank's gross non-performing asset (NPA) stood at 1.7 percent, down from 2.2 percent recorded in the same quarter last year. On the other hand, its net NPA for the quarter stood at 0.6 percent, improving from 0.80 percent on a year-on-year basis.
Gross slippages for Q4FY24 stood at Rs 1,356 crore, versus Rs 1,233 crore in Q3FY24
The net interest income (NII) of the lender came in at Rs 2153 crore, a marginal increase of 2 percent compared to Rs 2,105 crore reported in the corresponding quarter of the previous fiscal.
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