Embroiled in a controversy over the appointment of Shagun Gogia, daughter of co-founder, the late Ashok Kapur, on its board, Yes Bank is determined to retain its institutional character and follow RBI norms in the selection of its members. In an interview with Vivek Nair of The Telegraph, Rana Kapoor, founder, managing director and CEO of Yes Bank and also the current president of industry body Assocham, discusses the current macroeconomic trends and the focus of the bank to rise above the board tussle and improve its retail lending portfolio.
Yes Bank has been in the news with regard to the dispute over the nomination of Shagun Gogia on the board. Is an out-of-court settlement possible between the two sides? Can Gogia be appointed as a measure of settling the dispute and the approval be left to the RBI?
The matter is sub-judice. However, I will say Yes Bank is a professional lender and all the decisions are being taken in the interest of its institutional character. Banks are systemically important institutions. It’s not normal for family members to piggyback on a bank. We are quite determined to ensure that the professional ethos of the bank is retained. The stature of directors should be to fulfill the RBI norms.
The RBI will get its 23rd governor next month. So far, tackling inflation has been a key priority for the central bank. Should Raghuram Rajan (the designate RBI governor) focus more on growth?
The RBI has been striking a fine balance between growth and inflation. Recent developments have brought to the fore India’s external vulnerability. The new RBI governor will need to address this concern to restore stability in the foreign exchange market, and ensure the monetary policy supports growth while keeping a vigil on inflation.
The RBI has taken some measures to bring stability in the forex market. These measures have led to concerns that “larger funded” banks such as Yes Bank will be affected the most. This impacted Yes Bank shares in the stock markets. What are your views on this perception and what steps are being taken by the bank to bring down the larger component?
Yes Bank’s dependence on non-granular deposits has steadily declined over the past few years with the rise in retail deposits. There has been a strong improvement in the bank’s CASA (current and savings account) franchise on the back of a rapid branch network expansion and better savings product propositions. Retail fixed deposits stood at 19 per cent of total deposits in March 2013 against 11 per cent in March 2010.
Is the government doing enough to improve sentiment among Indian entrepreneurs and if not what more needs to be done?
The government has been rightly focusing on improving the business climate and confidence through reforms in foreign direct investments and by fast-tracking projects through the CCI (cabinet committee on investments). The government now needs to focus on key development areas such as power, urban infrastructure and manufacturing. It can also ensure utilisation of PSU cash surplus, building the Northeast as the future growth engine, speedy implementation of Goods and Services Tax and Direct Taxes Code, addressing the current account deficit and curtailing food inflation.
Is a savings account rate hike from Yes Bank on the anvil?
We offer a 6 per cent interest rate on deposits below 1 lakh and 7 per cent on those above 1 lakh, which is among the highest in the industry. Given the robust increase in branches, which stand at 475 as of June, CASA has shown significant improvement. The CASA ratio grew 61 per cent year-on-year to 20.2 per cent as on June 30 against 16.3 per cent a year ago. We continue to experience strong CASA traction and therefore see no need to change the savings account rate.
You were present at Mamata Banerjee’s recent interaction with industrialists and bankers at the World Trade Centre. What do you think of the interaction? Does she have a vision that Yes Bank could buy into? What are the bank’s plans for the east?
Bengal has been on the rising curve under Mamata Banerjee’s leadership, and has achieved a 7.6 per cent GDP (gross domestic product) growth, which is much higher than the national average of 4.96 per cent growth last fiscal. The state has also excelled in other indices such as planned capital expenditure, growth of agriculture, industry and services and health of the power sector. We fully subscribe to the chief minister’s view of Bengal’s strong potential and remain committed to the development of the state. Yes Bank has already 11 branches in Bengal and plans to open 30 branches across 15 cities by 2015.