Following a change in its management and fresh capital infusion, Yes Bank will focus on bringing down cost of deposits and may consider reducing savings rate to below 6%, sources close to the development told FE.
The cost of deposits for the bank stood at 6.4% at the end of the December quarter. As per Yes Bank website, the savings rate stands at 6% per annum for account balance of Rs 1 lakh and above. “The decision on rates, including savings rate, will be considered by the month end,” the source added.
Yes Bank refused to comment on a query sent by FE. The bank is facing the challenge of customers withdrawing more money from their accounts after the withdrawal cap of Rs 50,000 was lifted on Wednesday.
The Reserve Bank of India (RBI) had put restriction on the troubled lender on March 5, 2020, under which customers of the bank were allowed to withdraw up to Rs 50,000. The bank has now increased branch working hours by 60 minutes for public convenience till March 21.
“To serve you better, branches will open one hour earlier at 08:30 hours from March 19 to 21, 2020. Extended banking hours for senior citizens from March 19 to 27, 2020, 16:30 to 17:30 hours,”Yes Bank tweeted on Wednesday.
There was a sharp reduction in total deposits of the bank from Rs 2.09 lakh crore in September last year to Rs 1.37 lakh crore till March 5, 2020. The cost to income ratio of the private lender in the December quarter stood at 100.4%, up from 44% a year ago.
The bank is also looking to improve credit growth and wants to focus on the retail segment. “We have around 60% exposure to corporate loans..but want to have 60% retail and 40% corporate loans,” said Prashant Kumar, managing director and CEO-designate of Yes Bank. The private lender is also banking on recoveries of Rs 8,500-10,000 crore in the next fiscal.
SBI chairman Rajnish Kumar on Tuesday highlighted that deposits were the biggest concern for the private lender. However, he maintained that the bank has sufficient funding lines to meet any requirement.
The Rs 10,000-crore capital infusion would help meet capital requirement, he said, adding the next round of fundraising would take care of any additional capital needs. SBI alone has infused Rs 6,050 crore into Yes Bank for picking up a 48.2% equity stake. The SBI has nominated its deputy managing directors (DMDs) J Swaminathan and Partha Pratim Sengupta in the Yes Bank board.
Former Punjab National Bank (PNB) chairman Sunil Mehta will be the non-executive chairman of the reconstructed bank. The new board, which will also have nominees of Reserve Bank of India, will assume charge from March 26.