Rs 35,000 Crore repaid to RBI by Yes Bank
Rs 35,000 crore has been repaid by the Private sector lender Yes Bank to the Reserve Bank of India (RBI) out of the total special liquidity facility (SLF) of Rs 50,000 crore drawn for interim support. Sunil Mehta, Yes Bank’s Chairman said in the annual report of 2019-20.
SBI rescued Yes Bank from the lenders in March. It was the financial irregularities and careless lending by the management that led to a near financial collapse of the lender. Mehta said that the bank has improved its financial position.
Mehta said that they have successfully raised equity funding of Rs 15,000 crore through a follow-on public offering (FPO) towards the end of July. He added that this shows that the retail investors have strong confidence in the bank’s restructuring plan, action taken, future roadmap and professional leadership.
The bank’s Common Equity Tier (CET) 1 ratio has doubled to 13.4% from 6.6% in June end after the capital increase. This has brought its capitalization in line with peers of private sectors.
According to Mehta, the improved solvency ratio strengthens the bank’s resilience to potential asset quality risks as a result of the impact of economic slowdown and COVID-19.
The need to strengthen and augment oversight along with governance and risk management practices is being recognized by the Board of Directors.
‘Culture of Compliance’ as a key asset that needs to be nurtured and cherished- a culture of transparency, integrity, trust, accountability and collaboration, has been identified by the Board. They have acknowledged that strong corporate governance is key to success.
The fact that RBI found out major divergence in the NPA figures reported by the previous management makes these comments more significant.
Mehta said that the importance of good governance can’t be understood. This was also emphasized by RBI in its recent discussion paper on improving the governance quality. It also emphasized on empowering the Board of Directors to set the culture and values of the institution, identify and manage conflicts of interest, manage risks while also endeavoring to improve the supervisory oversight of senior management.
He said that Yes Bank is willing to be considered a bank that can be trusted for its integrity; a bank that practices highest standards of governance, is contemporary and is motivated to deliver value.