Private sector lender Yes Bank has repaid Rs 35,000 crore to the Reserve Bank of India (RBI) out of the total special liquidity facility (SLF) of Rs 50,000 crore drawn for interim support, Yes Bank’s Chairman Sunil Mehta said in the bank’s 2019-20 annual report.
“In addition to the SLF of Rs 50,000 crore extended by RBI, the bank has since then received strong customer liquidity inflows. I am pleased to report that the bank has, as of date, repaid Rs 35,000 crore of SLF. The balance will be repaid within the timelines set by RBI,” Mehta said in the annual report.
Yes Bank was rescued by a clutch of lenders led by the State Bank of India (SBI) in March. This was following a near financial collapse of the lender on account of the alleged financial irregularities and careless lending by previous management under founder Rana Kapoor.
Since the bail-out, Yes Bank has improved its financial position, Mehta said.
“Yes Bank has made significant progress. The bank successfully raised equity funding of Rs 15,000 crore through a follow‑on public offering (FPO) within four months of the restructuring scheme, amid challenging market conditions, towards the end of July,” Mehta said, adding this demonstrates the strong confidence of institutional and retail investors in the bank’s restructuring plan, action taken, future roadmap and professional leadership.
Following this capital increase, the bank’s Common Equity Tier (CET) 1 ratio has doubled to 13.4 percent from 6.6 percent at the end of June, bringing its capitalisation largely in line with the private sector peers, Mehta said.
“The significantly improved solvency ratio strengthens the bank’s resilience to potential asset quality risks, resulting from the impact of the economic slowdown and COVID-19 related disruptions on India’s economy,” Mehta said.
Going ahead, the Board of Directors recognises the need to strengthen and augment oversight along with governance and risk management practices, Mehta said in the report.
Acknowledging that strong corporate governance is key to success of an institution, the Board has identified ‘Culture of Compliance’ as a key asset "that we need to nurture and cherish - a culture of transparency, integrity, trust, accountability and collaboration," the chairman said.
These comments are significant since the RBI had earlier found out major divergence in the NPA figures reported by the bank under previous management and what was found by RBI’s inspection scheme.
“The importance of good governance cannot be understated, which was also emphasised by RBI in its recent discussion paper on improving the quality of governance and empowering the Board of Directors to set the culture and values of the institution, identify and manage conflicts of interest, manage risks while also endeavour to improve the supervisory oversight of senior management,” Mehta said.Going forward, he said Yes Bank aspires to be seen as a bank, which is trusted for its integrity, practices highest standards of governance, is contemporary and continuously motivated to deliver value to its stakeholders.