YES Bank to raise over $120 million from IFC

Will use funds to increase exposure to SMEs

YES Bank will raise over $120 million from the International Finance Corporation (IFC) to increase its exposure to Small and Medium Enterprises (SMEs). The fund raising involves a 5 to 7 year senior loan of $60 million from its own accounts and a syndicated loan of $65 million.

IFC said that the project is intended to support the Bank in providing access to finance to the SME portfolio, accessing long-term funding and diversifying its funding base franchise, improving its maturity mismatch position and growing its assets, increasing its reach and improving its market share, especially in the SME and MSME space.

IFC's credit line will deepen the partnership in this market segment, enabling YES Bank to utilise its growing, high quality networks and execution capabilities to serve high priority customers, which IFC cannot reach on its own.

In addition, IFC funding will add the much needed resources to YES Bank's MSME lending program, enabling significant additional numbers of MSME and agri customers to be served, said IFC.

The World Bank's arm also said at a time when there is almost no US Dollar funding in the markets, IFC will help YES Bank mobilise long term funding through syndications from its global network.

“With the IFC as lender of record, banks would be able to extend the tenors to up to 3 years, whose maturity is ideally suited to the asset book of YES Bank,” said IFC.

Long term funding: YES Bank runs an ALM mismatch in the short term buckets with its short term liabilities exceeding its short term assets, especially in the shorter end maturities. YES Bank needs to increase its long term funding to take care of this mismatch. At a time when long term credit has become extremely challenging, IFC's long term funding will help the Bank better manage its ALM profile.

Founded in 2004, YES Bank Ltd is the fourth largest private sector bank in India, with an asset base of $18 billion. The Bank has over 500 branches spread across 350 cities with more than 1100 ATMs. It is one of the fastest growing private sector banks, with the bank’s loan book growing at a CAGR of 38%, over the last 5 years.