By Raju Vernekar
Mumbai, Oct 27:
The “Yes Bank” is planning to shut down its 50 branches and reduce the number of ATMs and has also decided to reduce operational expenses by 20 per cent in financial year (FY) 2020-2021.
As against the loss of Rs 600 crore in the last few months, the bank registered a profit of Rs.129.37 crore in the second quarter of 2020-2021. The income in the corresponding period came down to Rs 5952.1 crore from earlier Rs. 8347.50 crore.
Now the bank intends to raise Rs two lakh crore till March 2021 to increase its capital. The bank which has already surrendered two floors in Central Mumbai’s upscale Indiabulls Finance Centre, which houses its corporate offices, is now aiming to renegotiate rent contracts for all its 1,100 branches.
Yes Bank’s Chief Executive and Managing Director Prashant Kumar said that it will be shutting down 50 branches as part of a rationalization effort, which will reduce its overall network, since there will be no new openings. After Kumar took charge of the affairs of the bank in March, the bank reduced operating expenses by 21 percent in September quarter.
Kumar said the bank is targeting r eduction in rents and a major operational overhead for lenders by 20 per cent. Many branches are located too close to each other and are not financially viable. Automated teller machine (ATM) network is also being rationalized. The bank will go back to network expansion in FY 2022, but the size of a branch will be much smaller than the current size. The idea is to leverage the digital offerings to reduce dependence on branches.
In the September quarter, the bank converted 35 rural branches to business correspondent locations. By rationalization moves, the operational cost is expected to come down up to Rs 35,000 per month from Rs 2 lakh earlier. As part of the rescue scheme, the bank is committed to employ all the existing employees at least for a year, Kumar said.
Yes Bank, a medium-sized private sector bank, ran into trouble following the RBI’s asset quality reviews in 2017 and 2018, which led to sharp increase in its impaired loans ratio and uncovered significant governance lapses that resulted in a complete change of management.
On 5 th March 2020, the RBI imposed a 30-day moratorium on the bank, superseded its board, and appointed Prashant Kumar, as CE and MD. The bank’s loan book grew up to Rs 2.25 trillion as on 30 September, 2019.
The bank’s Board of Directors was superseded when Enforcement Directorate noticed that its founder and Managing Director Rana Kapoor had perpetrated the scam worth Rs. 5050 crore by taking money out of the bank under the garb of debentures and loans by abusing his position and secondly, receiving kickbacks/gratification for the same.
A total of 12 persons were named as accused by the CBI in the scam and charge sheets were filed against Kapoor, Kapil Wadhawan (promoter of DHFL) and others under Sections 120 (B) (Criminal Conspiracy), 420 (Cheating) of the Indian Penal Code (IPC) along with Section 7, 12 & 13 of Prevention of Corruption Act.
The CBI also booked Kapoor’s wife and three daughters over allegations that they received kickbacks through DHFL, which they used for their company- DOIT Urban Ventures (India) Private limited. Kapoor’s daughters are 100% shareholders of this company. While Kapoor and Wadhwan are in CBI custody, Kapoor’s London flat worth Rs 127 crore has already been attached by the Enforcement Directorate.
