Certain that some solutions will emerge to steady YES Bank: SBI chief

State Bank of India (SBI) Chairman Rajnish Kumar said he’s certain “some solutions will emerge” to steady YES Bank, which has been on a prolonged quest to raise new capital.

“YES Bank is a significant player in the market with an almost $40 billion balance sheet,” he told Bloomberg Television in Davos. “I have a feeling that it will not be allowed to fail.”

Kumar’s statement follows speculation that the government, which controls SBI, may ask the lender to play a role in bailing out YES Bank. However, last month Kumar said it was “out of the question that SBI will do anything for YES Bank”.

 

 

YES Bank’s shares rose as much as 8 per cent in Mumbai on Thursday, paring the past year’s drop to 79 per cent. The lender is trying to shore up a core equity capital ratio that's barely above a regulatory minimum of 8 per cent.

Kumar said it won’t be good for India’s economy as a whole if YES Bank were to fail. “Because a bank of that size, if it is allowed to fail, there’s a problem,” he said. “And I am sure that some solutions will emerge.”

Asked about the credit crunch in the Indian economy, Kumar said he believes the credit market will be back to stability and normalcy soon. 

“There has been a series of steps... bank recapitalisation has happened, PSU banks, which control about 60 per cent of the assets in the country are returning to profits...,” he said.

He added that the course correction that was required has happened and banks are much more cautious than what we were earlier. He further stressed that “we are ready to lend”.