Yes Bank to adopt FMCG model, set up franchises

Rana Kapoor, managing director and chief executive officer of the newest private sector Yes Bank, plans to build the bank on the model of fast moving consumer goods majors such as Hindustan Lever and Proctor & Gamble.

Around 25 per cent of the bank's business will be conducted through its branches and the rest through franchises and agencies, Kapoor told Business Standard.

"The focus will be on outsourcing. We are looking closely at the franchise model. The franchises will see all our products. At the administrative level, everything "" from network to property management "" will be outsourced. The employees of Yes Bank will concentrate on banking and nothing else," Kapoor said. Kapoor along with Ashok Kapur hold 52 per cent stake in the bank which will take off in June.

The other stakeholders in the bank are Rabobank Nederland (20 per cent), CVC-Citigroup (10 per cent), Russel Asian Infrastructure Fund and ChrysCapital (7.5 per cent each).

The remaining three per cent is being kept for the top brass of the bank. According to Kapoor, Yes Bank will hit the capital market with an initial public offering (IPO) in 18 months. The bank aims at increasing its capital base to Rs 400 crore from the current Rs 217 crore.

The unique selling proposition of Yes Bank, according to Kapoor, is its ambiance. "Banking is a boring business. We need to differentiate ourselves from other players. That will be done by offering a unique experience to our customers. It's like having a coffee at Barista or Cafe Coffee Day instead of a regular coffee joint," he said.

The managing director also felt that if the service is good, the bank can charge a marginally higher price from his customers.

Initially the bank will focus on corporate and wholesale banking and simultaneously build its retail portfolio. The focus group will be the middle class clientele.

The bank will start with four branches and around 60 employees in June. By March 2005 it plans to have 10 branches in Mumbai, Delhi, Bangalore, Chennai, Calcutta, Hyderabad and Pune.

The focus of the branches will be third-party distributions. "We need to be versatile in product offerings. We are entering into alliances with other players for selling all kinds of financial products," Kapoor said.

In addition to the regular banking operations, the bank will also have a large food and agri thrust, with agri centres and agri infrastructure being the areas of interest.