 "There is no wrong in upholding a banks professional stature: Rana Kapoor")
Bombay High Court has admitted Madhu Kapur's plea challenging nomination of three directors on the banks' board. What will be your future course of action? Would you appeal to a larger bench?
We will come back with our strategy on how to handle this. Since the matter is sub-judice I can't comment on that. But since your question is based on a perception let me tell you if a bank is upholding its professional stature it is not negative. Shareholders and board members don't think like that. Banks are managed by boards and they are not family businesses. Secondly, our bank has a certain institutional character which is best defined by our HR philosophy. Anything which affects the character of the bank naturally has to be defended and protected by the board. It is a very eminent board and has shown the best report card by any private sector bank in first 10 years.
Don't you think the dispute will affect the bank and its investors?
Not at all. We are on the receiving end.
How are you bracing up yourself for competition from new private sectors banks?
When we started 10 years ago, the top three private banks were about the same age what we are today. I don't think we made an iota of difference to them. We have a reason to believe that a new bank, weather it is a conversion of NBFC or a greenfield bank, will take at least 10 years to build a distinct identity or even build market share. A bank like ours has grown at a CAGR of 35-36 per cent and even then we are not 1 per cent the market share. The competition for us is established large banks.
Would you look at acquisitions for faster growth of the bank?
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Our model for the last 10 years has been to grow organically because it gives us quality filters. Most of all we can distill HR of the bank. The day the real strength of any bank comes from its people. Also, infrastructure and risk culture are very critical issues in institution building. So when you put these factors on the radar then you can compromise a little bit on the growth. Fundamentally any merger or acquisition is difficult. If there is an opportunity to acquire portfolios, if somebody is divesting SME business or retail business or areas we are interested in growing that would be of interest to us.
Would you look at raising capital for funding the expansion?
We do have enabling approvals from all the authorities concerned to raise $500 million but we are going to wait for the atmospherics to improve, for the India story to resonate more in global markets because a significant part of our capital comes from international borders. We will use the opportunity probably in the second half of financial year 2014-15.
Where do you see yourself in the retail banking segment?
With a brand like Yes Bank we are destined to be a retail bank. By 2020 it will be distinctively our second biggest business and after that it should become our number one business.
The bank had announced version 2.0 in 2010. Are you on track towards achieving the goals?
Our objective in establishing version 2.0 was that we should take the next jump to a medium size bank with total assets of Rs one lakh crore. We achieved that in 2013. Some sacrifices we have made on the growth side because preservation of asset quality and optimization of capital have been incremental objectives during this phase. Today we have 550 branches, 1,150 ATMs and 9,000 employees. By 2015 most of our objectives will be met. There will be a version 3.0 which will start in April 2015.
As the economy is facing a slowdown and there is political uncertainty do you see any downside risks to your growth?
Bulk of the downside which was there in the atmospherics over the last two years is at a turning point and irrespective of the political outcome the economy is on a mend. It is not on a fast growth trajectory, but even at the current momentum it will find over 6 per cent growth because some of the deeper concerns regarding current account deficit, trade deficit and discipline in fiscal management are somewhat in control. If there is a decisive government it will help. Debottlenecking and fast-tracking infrastructure projects, creating jobs can have a huge multiplier.
What will be your focus areas in future?
Our focus continues to be sunrise sectors. We like sectors that have shown resilience. Some of the sunrise sectors where we had fairly sustained growth are food and agriculture business, life sciences and health care. Now we have added tourism and hospitality because it has got tremendous potential. We have broad-based our model to include education and urban infrastructure. Renewable energy continues to be a huge focus area for us. Media & entertainment is also a good growth segment.
What action do you expect from RBI in its annual monetary policy?
A. As far as April 1 is concerned you will probably see status quo although there are good indicators of inflation softening. But after that we see at least a 50 basis points downward adjustment in interest rates in the new financial year.